Extra changes made to debt buyback rules

The Treasury has announced a further change to rules on how groups of companies are taxed when buying back issued debt at a discount to the amount borrowed.

New legislation will ensure that when the discount on a buyback is not taxed subsequent release of the debt where the consideration for the release is ordinary shares in the debtor or the entitlement to any such shares will see the debtor being taxed on previously untaxed discount arising on the buyback.

The Treasury has also unveiled future amendments to the debt cap provisions set out in FA 2009 Sch 15.

Legislation is to be introduced to remove accountancy mismatches in the application of the gateway test to ensure that a consistent way of measuring liabilities is used in arriving both at a worldwide group’s gross debt and the net debt of UK companies

Preference shares are to...