SCHEDULES

SCHEDULE 20Taxation of hybrid capital instruments

PART 2Corporation tax, income tax and capital gains tax

Consequential amendments

7

1

Part 5 of CTA 2009 (loan relationships) is amended as follows.

2

In section 398 (overview of Chapter 12), in subsection (2)—

a

omit the “and” at the end of paragraph (d), and

b

after paragraph (e) insert

, and

f

section 420A (hybrid capital instruments).

3

In section 465(3) (provisions preventing amounts from being distributions), before paragraph (za) insert—

zza

section 420A(2) (hybrid capital instruments),

8

1

Part 10 of TIOPA 2010 (corporate interest restriction) is amended as follows.

2

In section 413(6) (adjusted net group-interest expense: “relevant enactment”) for paragraph (b) substitute—

b

section 320B of CTA 2009 (hybrid capital instruments: amounts recognised in equity).

3

In section 415 (qualifying net group-interest expense: interpretation), omit subsection (8).

9

1

The Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) Regulations 2004 (S.I. 2004/3256) are amended in accordance with this paragraph.

2

In regulation 2(1) (interpretation)—

a

after the definition of “fair value profit or loss” insert—

“hybrid capital instrument” has the meaning given by section 475C of CTA 2009;

b

omit the definition of “regulatory capital security”.

3

In regulation 3 (exchange gains or losses arising from liabilities or assets hedging shares etc), in paragraph (5)(c), for “a regulatory capital security” substitute “ a hybrid capital instrument ”.

4

In regulation 4 (exchange gains or losses arising from derivative contracts hedging shares etc), in paragraph (4A)(c), for “a regulatory capital security” substitute “ a hybrid capital instrument ”.