Chapter 43 - The Accrued Income Scheme

Question 1

In what circumstance does the accrued income scheme apply?

Answer 1

It applies to individuals, trusts & estates who are selling or purchasing interest-bearing securities / stock

The scheme does not apply to companies

Question 2

Individuals are not caught by the scheme if the nominal value of their total earnings does not exceed what amount in what time frame?

Answer 2

£5,000 at any time in both;

1. The tax year in which the next interest date falls

&

2. The previous tax year

Question 3

How does the scheme allocate the interest between the buy & seller?

Answer 3

It allocates it so that they are each taxed on the amount they have earned

Question 4

Define ‘cum-div’

Answer 4

An individual is buying the stock WITH the right to receive the next interest payment

Question 5

Define ‘ex-div’

Answer 5

An individual is buying the stock WITHOUT the right to receive the next interest payment

The seller will receive the final interest payment