Securities where the amount payable on redemption (A) exceeds (or may exceed) the issue price by more than A x 0.5% x Y, where Y is the lower of 30 and the number of years between issue and redemption (section 430, Income Tax (Trading and Other Income) Act 2005). The effect is that securities issued at a percentage discount greater than 0.5% of the issue price will, in principle, be deeply discounted securities. Certain instruments are excluded from the definition, such as shares, gilts that are not stripped, excluded indexed securities, life assurance policies and capital redemption policies.

Deeply discounted securities were formerly known as relevant discounted securities.

For further detail, see Practice note, Income tax: calculation of investment and sundry income profits: Profits from "deeply discounted securities".