Overview

deeply discounted security


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A loan stock or government security issued on such terms that the amount payable on maturity or any other redemption exceeds or may exceed the issue price by more than 15% or, if less, by more than 1/2% for each completed year between issue and redemption. 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). Under the current tax rules, as set out in the Income Tax (Trading and Other Income) Act 2005, profits on any disposal of such securities are charged to income tax.

Subjects: Accounting.


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