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A charge to income tax on savings and investment income arises on the disposal of a deeply discounted security (DDS). The charge is on the full amount of the profit arising in a tax year.

The profit on a disposal of a DDS is X – Y – Z where¹:

1. Ìý

   ÌýÌýÌýÌý X is the amount payable on disposal;

2. Ìý

   ÌýÌýÌýÌý Y is the amount paid to acquire the security by the person making the disposal;

3. Ìý

   ÌýÌýÌýÌý Z is the amount of any incidental expenses incurred by that person before 27 March 2003 in connection with the acquisition of the securities.

Incidental expenses incurred after 26 March 2003 and before 6 April 2015 are deductible only on the acquisition or disposal of listed securities held since before 27 March 2003²; see E1.434. Relief for incidental expenses incurred before 27 March 2003 remains³.

If a security has been sold and re-acquired, only the amount paid for the most recent acquisition is taken into account on a subsequent