§ Mr. Budgenasked the Chancellor of the Exchequer how profits from traded option contracts on the Financial Times Stock Exchange 100 index will be treated for taxation purposes.
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§ Mr. MooreThe Inland Revenue will treat profits and losses on traded option contracts on the FT-SE 100 index in the same way as profits and losses on traded options on company stocks. In the case of certain financial concerns such as banks and investment dealing companies, and where dealings in options amount to trading, any profits or losses will be treated as income and assessed under case I of schedule D.
In general, however, profits and losses will be regarded as of a capital nature and hence within the capital gains tax provisions. They will fall within the scope of clause 63 of the Finance Bill so that the full acquisition cost of an option will be allowable in computing the gain or loss which arises on its disposal and the abandonment of an option will be treated as a disposal.