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This is a quick guide for advisers. Subscribers, click here for your detailed guide.

Loan stock: QCBs or non-QCBs?

Loan notes may be structured as qualifying corporate bonds (QCBs) or non-qualifying corporate bonds (non-QCBs).

QCBs

Non-QCBs


Loan note summary

Tax feature

QCBs

Non-QCBs

Gain deferred until redemption

Yes

Yes

Loss relief for bad debt

No

Yes

Entrepreneurs’ Relief on disposal of loan note

No, but may elect to crystallise earlier

No, but may elect to crystallise earlier

Roll-over on subsequent take-over

No

Yes

Small print:

See Loan Stock: QCBs or Non-QCBs - for more detail, case law and examples

Section 116(10) TCGA 1992 - Reorganisations, conversions and reconstructions

Sect 169R TCGA 1992 (as amended by Finance (no 2) Act 2010 reorganisations involving acquisitions of QCBs