The UK Launches Consultation on Draft Regulations for New Rules on Taxation of Hybrid Capital Instruments

UK HMRC has launched a technical consultation on draft regulations that will ensure new rules on the taxation of hybrid capital instruments work as intended for instruments with a takeover or change of control clause.

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Consultation description

Hybrid capital instruments are a form of debt with some features of equity. This can lead to uncertainty as to whether the payments under the hybrid instrument should be taxed as interest (which is typically deductible) or as distributions (whic…