LLM5080 - Names: income from ancillary trust funds (바카라 사이트˜ATFs바카라 사이트™): other types of security
Relevant discounted securities (RDS)
These are securities where the investor바카라 사이트™s return is mainly made up of a discount or premium payable on redemption, rather than by interest payable over the life of the bond. Any loss on disposal of a relevant discounted security that is held in an ATF is allowable as a deduction from Lloyd바카라 사이트™s trade profits, and can create or augment Lloyd바카라 사이트™s trading losses which attract the same treatment as any other trading losses. This differs from the treatment of losses on disposals of RDS which are part of a Name바카라 사이트™s personal portfolio - these losses can only be set against other income of the year of loss.
Non residents and FOTRA securities
There is no exemption from tax on the interest arising on FOTRA (free of tax to residents abroad) gilts that are held as part of a non-resident Name바카라 사이트™s personal Funds at Lloyd바카라 사이트™s. This is because the income arising on gilts held as part of an ATF is included in trading results.
Gains on life assurance policies, life annuities and capital redemption policies
These types of policies may be held as part of a Name바카라 사이트™s Funds at Lloyd바카라 사이트™s but the tax treatment of any gain on these policies depends on how the policy is used to back the underwriting. If the life company has provided a guarantee to Lloyd바카라 사이트™s secured on the life policy, the gains do not form part of the Name바카라 사이트™s Lloyd바카라 사이트™s trading income, and are taxable under the chargeable event regime (that is, they are included as part of the taxpayer바카라 사이트™s total income and, if UK policies, are treated as having borne tax at lower rate, with top slicing relief available if the gain takes the taxpayer into higher rate tax for that year).
If, however, the Trust Deed governing the Lloyd바카라 사이트™s Deposit includes the policy itself, the profits on the policy are included in the Lloyd바카라 사이트™s trade income. Because the gains are included in trading profits, the chargeable event regime does not apply. Gains are computed on accountancy principles, UK policy gains are not regarded as having suffered tax at the lower rate, and neither is top slicing relief available.
Building society mergers and take-overs
If the Funds at Lloyd바카라 사이트™s are held in a building society that is involved in a merger or a take-over by a limited company, the Name, or Lloyd바카라 사이트™s as trustees, may receive cash and/or shares. To the extent that cash payments relate to deposits held as part of Funds at Lloyd바카라 사이트™s, those payments which are liable to income tax should be included in the Name바카라 사이트™s ATF income for the tax year corresponding to the calendar year in which the payment is received.
Cash payments liable to income tax are generally those received following a building society merger. Cash payments received following the take-over of a building society, or conversion of a building society into a limited company are generally liable to capital gains tax.