Debt securities (loan notes) that are not qualifying corporate bonds (QCBs). A loan note held by an individual or trustee will be a non-QCB if it has certain features, including a foreign currency redemption provision (where the loan note is redeemable in a non-sterling amount determined at least ten days before redemption), or if it includes terms that are not normal commercial terms (for example, if it provides the loan note holder with a right to subscribe for additional securities).

Non-QCBs are within the charge to capital gains tax (CGT). A shareholder who accepts non-QCBs as consideration for the sale of his shares on takeover or reorganisation will, unless he makes an election in conjunction with a claim for entrepreneurs' relief, be treated as not having made a disposal for the purposes of CGT. In such a case, the loan notes are deemed to have been acquired at the same date and for the same consideration as the shares in exchange for which they have been received and the capital gain is not calculated until the non-QCBs are disposed of.

For more information on non-QCBs, see PLC Tax, Practice note, Loan notes in share deals: tax FAQs.