Chapter 43: The Accrued Income Scheme

Question 1

The Accrued Income Scheme

What is The Accrued Income Scheme’s Purpose?

Answer 1

To Calculate The ‘Accrued Interest’ Every Time Stock is Bought & Sold.

Allocated Between Buyer & Seller.

Question 2

The Accrued Income Scheme

What is The ‘Nominal Value’ of a Security?

Answer 2

The Value in Which Interest Payments Are Calculated.

All Securities Have a Nominal Value.

Question 3

The Accrued Income Scheme

What Does The Scheme Apply to?

Answer 3

Interest-Bearing Marketable Stocks & Bonds.

e.g., Company Loan Stock.

Question 4

The Accrued Income Scheme

Who Can The Scheme Apply to?

Answer 4

Individuals, Trusts & Estates.

Non-UK Residents Aren’t Caught in The Scheme.

Question 5

The Accrued Income Scheme

When Would The Scheme Not be Applied?

Answer 5

If The Nominal Value of a Total Holding is < £5,000 in Both:
* The Tax Year of The Next Interest Payment; and
* The Previous Tax Year.

Question 6

The Accrued Income Scheme

Which Security is Exempt From CGT?

Answer 6

British Govt. Securities.

(‘Gilts’)

Question 7

The Accrued Income Scheme

What is a Taxpayer’s Responsibility With Accured Income?

Answer 7

In Making Adjustments to Their Interest Figures.

Declared on The Self-Assessment Return.

Question 8

The Accrued Income Scheme

What is The Interaction Between Accrued Income & CGT?

Answer 8

For CGT, Any Accrued Income Must be Excluded.

Found in The Contract Note of a Transaction.