§ Mr. Eggarasked the Chancellor of the Exchequer whether he will give further information about the proposed legislation on the tax treatment of deep discounted stock.
§ Mr. RidleyWith my approval the Inland Revenue will be issuing a short consultative paper on this subject early in January.
Some concern has been expressed that the legislation the Government propose to introduce to impose an income tax charge where there are transactions in deep discounted stock between issue and redemption might result in double taxation if the full discount was charged to income tax on redemption without taking any account of earlier charges on disposals before redemption. The precise treatment of transactions after 5 April 1983 will depend on the form in which the proposed legislation is finally enacted. However, it is not the Government's intention that more profit should be charged to tax overall, taking into account relief for losses as well as charges on profits, than the difference between the issue price and the price at which 654W the stock is redeemed. In addition, any interest actually payable annually on the stock will be taxable in the normal way.