QCB

(QCB)

Debt securities that are exempt from tax on chargeable gains so that a disposal does not give rise to any chargeable gain or allowable loss for the purposes of capital gains tax.

For corporation tax purposes as regards disposals after 31 March 1996, with certain exceptions, the definition of a QCB includes any asset representing a loan relationship (section 81, Finance Act 1996) of the company.

For other shareholders a QCB must be a debt security which satisfies each of the following criteria:

• It is in sterling and has no rights of conversion into, or redemption in, currency other than sterling.

• It has no rights of conversion to certain shares or other securities, and no rights to subscribe for additional shares or securities.

• The interest paid must not exceed a reasonable commercial return, nor depend on the results of all or part of the issuer's business.

It is either redeemable at par or on terms comparable with the terms of other listed securities. (Sections 115 and 117, Taxation of Chargeable Gains Act 1992).

All deeply discounted securities are QCBs which ensures that no loss made on a deeply discounted security is allowable for the purposes of tax on chargeable gains.

Related links

capital gains tax

earn-out

loan notes

consideration