»Ê¹ÚÌåÓýapp

Conditions for S92 to apply: holder of the security

This guidance applies to periods of account beginning before 1 January 2005

FA96/S92(1)(f) stated that the security must ‘not be one, the disposal of which would fall to be treated as a disposal in the course of activities forming an integral part of a trade carried on by the company�.

In other words, any convertible securities, a profit on which fell to be treated as a trading receipt by, for example, banks or other financial traders, would not get chargeable gains treatment. »Ê¹ÚÌåÓýapp profits would be taxed as income under the loan relationship rules, the same as other securities held as trading stock. Note that a company did not have to be a financial trader for securities to be held as an ‘integral part of the tradeâ€�, though those circumstances were likely to be extremely rare.

Life assurance companies

That exception did not apply to a life assurance company holding the security in connection with its basic life assurance and general annuity business where the I minus E basis was applied to it. See the Life Assurance Manual and FA96/SCH11/PARA1(1A).