Company: LLOBF
Filing Date: 2025-10-28
Form Type: 424B2
Source: 0000950103-25-013683
Chunk: 68

Company: Lloyds Banking Group plc
Filing Date: 2025-10-28
Form: 424B2
Chunk 68
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 instruments” and are not expected to be issued with original issue discount
(“OID”).

Fixed Rate Notes. Although the matter is
not entirely clear, the Fixed Rate Notes should be treated as “variable rate debt instruments” that provide for stated interest
at a single fixed rate followed by a qualified floating rate (“QFR”) for U.S. federal income tax purposes.

Under the Treasury regulations applicable to variable
rate debt instruments, in order to determine the amount of OID, if any, and qualified stated interest (“QSI”) in respect of
the Fixed Rate Notes of the relevant series, an equivalent fixed rate debt instrument must be constructed. The equivalent fixed rate debt
instrument is constructed in the following manner: (i) first, the initial fixed rate is converted to a QFR that would preserve the fair
market value of such Fixed Rate Notes, and (ii) second, each QFR (including the QFR determined under clause (i) above) is converted to
a fixed rate substitute (which generally will be the value of that QFR as of the issue date of the Fixed Rate Notes). Under the applicable
Treasury regulations, the Fixed Rate Notes of the relevant series generally will be treated as providing for QSI at a rate equal to the
lowest rate of interest in effect at any time under the equivalent fixed rate debt instrument, and any interest under the equivalent fixed
rate debt instrument in excess of that rate generally will be treated as part of the stated redemption price at maturity and, therefore,
as possibly giving rise to OID. Based on the application of these rules to the Fixed Rate Notes and the expected issue price of the Fixed
Rate Notes, we do not expect the Fixed Rate Notes to be treated as issued with OID. The remaining discussion assumes the Fixed Rate Notes
will not be treated as issued with OID.

Interest. Interest on the Senior
Notes (including U.K. tax withheld, if any) will be includable in income by a U.S. holder as ordinary interest income at the time it accrues
or is received, in accordance with the U.S. holder’s method of accounting for U.S. federal income tax purposes. Interest income
from the Senior Notes (including any U.K. tax withheld) will constitute foreign-source income, which may be relevant to a U.S. holder
in calculating the U.S. holder’s foreign tax credit limitation. The limitation on foreign taxes eligible for credit is calculated
separately with respect to specific classes of income. The rules governing foreign