Hybrid capital instruments taxation rules amended

HMRC has published draft regulations that amend the new hybrid capital instruments rules introduced by FA 2019. These ensure that takeover or change of control terms will not exclude instruments that would otherwise meet the conditions to qualify as debt. They amend the definition of ‘conversion event’ to permit conversion of instruments into ordinary share capital of the debtor, or of a company which obtains control of the debtor, following a takeover or change of control.

The amendment will have effect from 1 January 2019-12 February for stamp duty and stamp duty reserve tax. HMRC announced its intention to make this amendment in an update to the technical note published at Budget 2018.

Comments should be emailed to ursula.crosbie@hmrc.gov.uk by 9 August.