The EU Solvency II Directive (which introduces a new, harmonised regulatory regime across the EU from 1 January 2016) and changes made to CTA 2009 Part 5 by F(No.2)A 2015 necessitate that changes are required to ensure the regulatory capital securities regulations provide the correct tax treatment for financial institutions issuing regulatory compliant securities.
The Taxation of Regulatory Capital Securities (Amendment) Regulations, SI 2015/Draft, ensure that ‘Solvency II’ compliant instruments issued by insurers and other financial institutions in the form of debt are subject to income tax under the loan relationships rules. The regulations also take account of changes to the treatment of corporate debt and derivative contracts introduced by F(No.2)A 2015 Sch 7. The changes will take effect from 1 January 2016, subject to transitional provisions. Following consultation on an initial draft between July and September 2015, the scope of the regulations has been extended to include both Solvency II compliant Tier 1 and Tier 2 instruments.
The EU Solvency II Directive (which introduces a new, harmonised regulatory regime across the EU from 1 January 2016) and changes made to CTA 2009 Part 5 by F(No.2)A 2015 necessitate that changes are required to ensure the regulatory capital securities regulations provide the correct tax treatment for financial institutions issuing regulatory compliant securities.
The Taxation of Regulatory Capital Securities (Amendment) Regulations, SI 2015/Draft, ensure that ‘Solvency II’ compliant instruments issued by insurers and other financial institutions in the form of debt are subject to income tax under the loan relationships rules. The regulations also take account of changes to the treatment of corporate debt and derivative contracts introduced by F(No.2)A 2015 Sch 7. The changes will take effect from 1 January 2016, subject to transitional provisions. Following consultation on an initial draft between July and September 2015, the scope of the regulations has been extended to include both Solvency II compliant Tier 1 and Tier 2 instruments.
