Asset-backed securitisations—the UK tax treatment

The following Tax practice note provides comprehensive and up to date legal information covering:

  • Asset-backed securitisations—the UK tax treatment
  • What is a securitisation?
  • Taxation of companies falling within the permanent securitisation regime
  • Corporation tax charge on margin
  • Other modifications to corporation tax
  • Why does a special tax regime apply to securitisation companies?
  • What happens if a company falls outside the securitisation regime?
  • What is a securitisation company?
  • Types of securitisation company
  • Unallowable purposes
  • More...

Asset-backed securitisations—the UK tax treatment

FORTHCOMING CHANGE: A consultation explores the potential for reforming the taxation of securitsation companies, including, among other things, permitting an originator to acquire or retain more than 50% of the notes, extending the scope of assets that can be securitised (currently restricted to financial assets), considering the impact of the £10m value threshold and addressing uncertainty about the application of the loan capital exemption from stamp duty to the transfer of (i) notes and (ii) pools of small loans. For more information, see News Analysis: Tax consultation day—23 March 2021—Reform of the taxation of securitisation companies.

This Practice Note considers the UK taxation treatment of securitisation companies that fall within the scope of the permanent securitisation regime. It explains:

  1. what a securitisation is

  2. that there are five types of securitisation company

  3. the additional conditions that must be satisfied by any type of securitisation company in order for it to be taxed under the permanent securitisation regime, namely:

    1. the unallowable purposes test, and

    2. the payments condition

  4. the UK corporation tax treatment that applies to securitisation companies that satisfy all the conditions to be taxed under the permanent securitisation regime

  5. the consequences for a company of failing to fall within the permanent securitisation regime

  6. the limited recourse nature of the notes issued in a securitisation

  7. the interaction with the diverted profits tax, the

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