Discounts (and premiums) are alternatives to interest in rewarding investors for lending money. Although not specifically mentioned, they come within the loan relationships legislation as ‘profits, gains and losses’ arising from a company's loan relationships.
Discounts taxed as money debts
CTA09/S480 brings certain types of discounts within the rules on money debts, where:
•the company is a creditor (and so the money debt is an asset)
•the money debt is one from which a discount arises.
The rule applies from 16 March 2005, and transitional rules exclude from the provision any discount on a money debt which accrued before 16 March 2005.