Taxes Consolidation Act 1997 section 51

Funding bonds issued in respect of interest on certain debts

Section 51 sets out the tax treatment of funding bonds issued to creditors in respect of interest owed on government, public authority, or corporate debts.

• "Funding bonds" is broadly defined to include all bonds, stocks, shares, securities, and certificates of indebtedness.
• The section applies to debts owed by any government, public authority, public institution, or body corporate, regardless of location.
• When funding bonds are issued to a creditor in lieu of paying interest on a qualifying debt, the issue is treated for tax purposes as a payment of interest equal to the value of the bonds at the time of issue.
• The subsequent redemption of the funding bonds is not treated as a payment of interest for any tax purpose, preventing double taxation of the same interest.