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Posted Thu, 21 Sep 2023 14:25:13 GMT by paul
Where a company offers an exchange fee for when a company wants an individual holders of it's loan stock to roll over into a new longer dated loan notes how is the exchange fee treated for tax . It is usually something like 1.5 per cent of the nominal amount held. I cannot find anything on this and the offer document is silent. Are the fees chargeable to capital gains tax as it arises from an investment which is tradeable? If not is it a tax free item. I am thinking It does not seem to be interest as it's a one of payment if taken up rather than annual interest on the stock itself which gets reported as interest on an individuals personal tax return.
Posted Tue, 26 Sep 2023 09:58:07 GMT by HMRC Admin 17

Please refer to guidance at :

Business Income Manual  .

Thank you.  
Posted Thu, 05 Oct 2023 09:57:14 GMT by paul
Hi The Business Income manual does not seem to be relevant as the transaction relates to an individual tax payer not a tax payer who has a business. Nor do the loan relation ship rules apply as these only relate to companies. In any case the page which is linked to is referring to deductions where as in this case the tax payer is receiving the exchange fees so this is income or gain more likely the latter as one off transaction not linked to a coupon rate of the bond itself. Can you please direct me for something more appropriate in your manuals?
Posted Wed, 25 Oct 2023 14:10:36 GMT by HMRC Admin 20
Hi paul,

The payment received is a one-off payment and will be charged to income tax not capital gains tax as there has been no disposal.
The exchange fee should be recorded in the ‘other income’ section of a Self Assessment return in SA100 TR3 Box 17 and a description in Box 21.
CFM31060 - Loan relationships: what are loan relationships: when is a security issued?

Thank you

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