Income Tax Act 2007

Transfers to which Chapter applies

620Transactions which are transfers: general

(1)References in this Chapter to the transfer of securities are—

(a)to the transfer of securities by way of sale, exchange, gift or otherwise,

(b)to the conversion of securities in any case where there is no transfer of the securities within paragraph (a),

(c)to the redemption of variable rate securities, or

(d)to a transaction or event treated as a transfer under—

(i)section 648(1) or (3) (strips of gilt-edged securities),

(ii)section 649(4) (new securities issued with extra return),

(iii)section 650(2), (4) or (6) (trading stock appropriations etc),

(iv)section 651(2) (owner becoming entitled to securities as trustee), or

(v)section 652(2) (securities ceasing to be held on charitable trusts).

(2)But subsection (1)(a) does not include—

(a)the vesting of securities in personal representatives on death, or

(b)the transfer of a security to which Chapter 8 of Part 4 of ITTOIA 2005 applies subject to the rules in sections 454 to 456 of that Act.

(3)For the purposes of this Chapter—

(a)a transfer of securities under an agreement takes place when the agreement is made, and

(b)the person to whom they are to be transferred under the agreement becomes entitled to them at that time.

(4)But in the case of a conversion of securities within subsection (1)(b), the transfer takes place on the day of the conversion.

(5)And in the case of a redemption of securities within subsection (1)(c), the transfer takes place on the day of the redemption.

(6)Subsection (1) is subject to—

• section 648(7) (transactions forming part of exchanges concerning strips of gilt-edged securities),

• section 653 (stock lending), and

• section 655 (transfers under sale and repurchase arrangements).

(7)In this Chapter “conversion”, in relation to securities, has the meaning given by section 132 of TCGA 1992.

621Transferors and transferees

(1)In this Chapter “transferor” and “transferee” are to be read in accordance with section 620 (but this is subject to subsections (2) to (4)).

(2)In the case of a conversion of securities within section 620(1)(b)—

(a)the person who was entitled to the securities immediately before the conversion is treated as the transferor, but

(b)no one is treated as the transferee.

(3)In the case of a redemption of securities within section 620(1)(c)—

(a)the person who was entitled to the securities immediately before the redemption is treated as the transferor, but

(b)no one is treated as the transferee.

(4)The following provisions also contain rules about who is the transferor or the transferee for certain transfers—

• section 648(1) to (4) (strips of gilt-edged securities),

• section 649(4) and (5) (new securities issued with extra return),

• section 650 (trading stock appropriations etc),

• section 651(2) and (3) (owner becoming entitled to securities as trustee),

• section 652(2) and (3) (securities ceasing to be held on charitable trusts), and

• section 666 (certain transfers by or to nominees or trustees treated as made by or to others).

(5)See also sections 638 to 647 (excluded transferors and transferees).

622Application of Chapter to different kinds of transfer

(1)Different rules apply under this Chapter for the different kinds of transfer specified in subsection (2).

(2)The transfers are—

(a)transfers with accrued interest (see section 623),

(b)transfers without accrued interest (see section 624),

(c)transfers with unrealised interest (see section 625), and

(d)transfers of variable rate securities (see section 626).

(3)If a transfer is both a transfer with unrealised interest and a transfer of a kind specified in subsection (2)(a), (b) or (d), both the provisions of this Chapter applicable to transfers with unrealised interest and the provisions applicable to the other kind of transfer apply to the transfer.

623Transfers with accrued interest

(1)The general rule is that securities are transferred with accrued interest for the purposes of this Chapter if they are transferred with the right to receive interest payable—

(a)in a case where the settlement day is an interest payment day, on the settlement day, and

(b)in any other case, on the first interest payment day after the settlement day.

(2)But, in the case of the transfers specified in subsection (3), subsection (4) applies instead of subsection (1).

(3)The transfers are those treated as made under—

(a)section 620(1)(b) (conversion),

(b)section 650 (trading stock appropriations etc),

(c)section 651 (owner becoming entitled to securities as trustee), and

(d)section 652 (securities ceasing to be held on charitable trusts).

(4)If the person treated as the transferor had the right to receive interest payable as mentioned in subsection (1)(a) or (b), the securities are treated as transferred with accrued interest.

(5)This section is subject to section 626 (transfers of variable rate securities).

(6)See also—

• section 648(6) (certain exchanges of strips treated as transfers with accrued interest), and

• section 649(4) (issue of new securities with extra return treated as transfer with accrued interest).

624Transfers without accrued interest

(1)The general rule is that securities are transferred without accrued interest for the purposes of this Chapter if they are transferred without the right to receive interest payable as mentioned in section 623(1)(a) or (b).

(2)But, in the case of the transfers specified in subsection (3), subsection (4) applies instead of subsection (1).

(3)The transfers are those treated as made under—

(a)section 620(1)(b) (conversion),

(b)section 650 (trading stock appropriations etc),

(c)section 651 (owner becoming entitled to securities as trustee), and

(d)section 652 (securities ceasing to be held on charitable trusts).

(4)If the person treated as the transferor did not have the right to receive interest payable as mentioned in section 623(1)(a) or (b), the securities are treated as transferred without accrued interest.

(5)This section is subject to section 626 (transfers of variable rate securities).

(6)See also section 648(5) (certain exchanges of strips treated as transfers without accrued interest).

625Transfers with unrealised interest

(1)For the purposes of this Chapter securities are transferred with unrealised interest if they are transferred with the right to receive interest payable on an interest payment day falling before the settlement day.

(2)Such interest is referred to in this Chapter as “unrealised interest”.

626Transfers of variable rate securities

(1)Sections 623 and 624 do not apply to transfers of variable rate securities.

(2)Such transfers are not treated as transfers with accrued interest or transfers without accrued interest.

627Meaning of “variable rate securities”

(1)For the purposes of this Chapter securities are “variable rate securities” unless their terms of issue provide that throughout the period from issue to redemption (whenever redemption might occur) they are to carry interest at a rate which falls into one, and one only, of the categories specified in subsection (2).

(2)The categories are—

(a)a fixed rate which is the same throughout the period,

(b)a rate which bears the same fixed relationship to a standard published base rate throughout the period, and

(c)a rate which bears the same fixed relationship to a published index of prices throughout the period.

(3)In subsection (2) “published index of prices” means the retail prices index or any similar general index of prices which is published by the government of any territory outside the United Kingdom or by an agent of such a government.

(4)In determining whether new securities (within the meaning of section 649 (new securities issued with extra return)) are variable rate securities, the interest payable on them on the first interest payment day after their issue is treated as payable in respect of the period beginning with the relevant period and ending with that day.

(5)In subsection (4) “the relevant period” has the meaning given by section 649(8).