§ Dr. McDonald
asked the Chancellor of the Exchequer if he will estimate the total revenue in a full year from the payment of income tax by investors on the total of all accrued income from deep discount securities.
§ Mr. Moore
[pursuant to his reply, 14 May 1984]: Clause 36 of the Finance (No. 2) Bill provides rules for the tax treatment of deep discount securities by companies. In general the borrower will get relief annually for the accrued discount, while the investor will be taxed on the discount on disposal or maturity. The estimate of full-year cost in the FSBR is £15 million and is described as highly uncertain. The actual cost (which represents a deferment rather than an exemption from tax) will depend on the extent to which companies issue deep discount securities. The FSBR figure covers income tax and corporation tax. The income tax proportion separately will depend on the status of the investors and it is not possible to predict this at this stage.