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Eurobond query

22 September 2009
Issue: 4224 / Categories: Forum & Feedback , Capital Gains , Income Tax
A client has sold zero interest eurobonds at a substantial gain. Is this profit treated as income or capital and what are the taxation consequences?

Our query relates to eurobonds and information is sought on their taxation treatment. In 1999 our client purchased £87 000 Bayerische Landesbank Girozentrale 0% euro medium-term notes 26 February 2009 (£1 000) at a cost per the contract note of £50 055 including broker’s fee.

In 2009 the notes were redeemed and our client received £87 000 making a gain in 2008/09 of £36 945.

Is the whole of the gain liable to tax as a capital gain or as income? Or if partly taxed as income and partly taxed as a capital gain how is each element calculated?

Depending on the amount any income element is likely to push our client into the higher rate. Is any top-slicing relief available? Is it possible that any capital gain is exempt as a qualifying corporate bond?

Readers’ advice would be appreciated.

Query 17 474 –...

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