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deep discount


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A loan stock issued at a discount of more than 15% of the amount on redemption or, if less, at a discount of more than 1/2% for each completed year between issue and redemption. The discount will be treated as income accruing over the life of the stock. For example, a deep-discount bond might be a four-year loan stock issued at £95 for every £100 nominal (the discount exceeds 1/2% per annum) or a 25-year loan stock issued at £75 for every £100 nominal (the discount exceeds 15% in total). On deep-discount securities the discount is normally chargeable to tax. There are new proposals to tax all discounts.

Subjects: Business and Management.


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