VosFraG

Assuming that you're referring to CFM37140 that is only applicable to index-linked gilts, not conventional gilts. - CFM37120, CFM37130 and CFM37140 address index-linked gilts. - CFM37150 and CFM37160 addresses gilt strips - CFM37170 addresses specific FOTRA and '3½% War Loan Or After' gilts Conventional gilts are only addressed in CFM37110, which says "All gilts are wholly exempt from chargeable gains" This appears to be clear in TCGA92/S115 and I also found this explanatory note: https://www.legislation.gov.uk/uksi/2022/754/made "Section 115 of the Taxation of Chargeable Gains Act 1992 (“TGCA”) provides that gains on the disposal of “gilt-edged securities” are not chargeable gains. They are not therefore subject to capital gains tax (or, for companies, corporation tax)." Given the above, it appears to me that disposal of a gilt (either through sale or holding to maturity) is not subject to corporation tax. However that the coupon payment (eg interest received on the loan) would be taxable. Please confirm or direct to relevant manual/legislation.

My business retains a significant portion of earnings to pay dividends and to corporation tax. Currently these funds are held in savings accounts, the interest reported and taxed. I understand that if an INDIVIDUAL purchases Gilts that the coupon is taxable however the capital gain (difference between purchase and maturity) is tax free. I have had difficulty finding information for a COMPANY purchasing gilts. The DMO (https://web.archive.org/web/20240813114914/https://www.dmo.gov.uk/responsibilities/gilt-market/buying-selling/taxation/) appears to indicate that gilts are treated as a loan relationship and that the total return (coupon and gain on maturity) would be taxable. However CFM37100 appears to carve-out gilts as a special case and specifies that "All gilts are wholly exempt from chargeable gains". Please clarify the tax treatment of gilts held by a company, including two scenarios: 1) Gilts held to maturity 2) Gilts sold before maturity