Eurobond query

Our query relates to eurobonds and information is sought on their taxation treatment. In 1999 our client purchased £87 000 Bayerische Landesbank Girozentrale 0% euro medium-term notes 26 February 2009 (£1 000) at a cost per the contract note of £50 055 including broker’s fee.

In 2009 the notes were redeemed and our client received £87 000 making a gain in 2008/09 of £36 945.

Is the whole of the gain liable to tax as a capital gain or as income? Or if partly taxed as income and partly taxed as a capital gain how is each element calculated?

Depending on the amount any income element is likely to push our client into the higher rate. Is any top-slicing relief available? Is it possible that any capital gain is exempt as a qualifying corporate bond?

Readers’ advice would be appreciated.

Query 17 474 –...