The government recently introduced new rules on the taxation of hybrid capital instruments to address uncertainty regarding the taxation of instruments with takeover or change of control clauses. The result of the proposed amendments is that, subject to certain conditions, interest payments on all debt-like interests are deductible.

HMRC sought views on the draft regulations. The consultation ran from 5 July 2019 to 9 August 2019, and responses contributed to an amendment of the regulations. The Taxation of Hybrid Capital Instruments (Amendment of Section 475C of the Corporation Tax Act 2009) Regulations 2019 ensures that any amendments work for hybrid capital instruments, and allows extra time to make an election in certain circumstances. 

For more information about the new rules, click here