Taxation of Chargeable Gains Act 1992 section 151N

Investment bond arrangements

Section 151N defines the conditions that must be met for arrangements to qualify as an "investment bond arrangement" for capital gains tax purposes.

• An investment bond arrangement arises where a bond-holder pays capital to a bond-issuer, who uses it to acquire specified assets to generate income or gains, and agrees to repay the capital and make additional payments (capped at a reasonable commercial return) during or at the end of a fixed bond term.
• The arrangements must be listed on a recognised stock exchange or admitted to trading on a multilateral trading facility operated by a regulated recognised stock exchange, and must be wholly or partly treated as a financial liability of the bond-issuer under international accounting standards.
• The bond assets may be of any kind, the additional payments may be fixed or variable, the redemption payment may be reduced if asset values fall, and the bond-holder must be able to transfer their rights to another person.
• These provisions are subject to the arm's-length requirement in section 151O, which excludes arrangements where the terms are not on a commercial basis.