PT33 & 34 Accrued Income Scheme & Beneficiaries of Deceased Estates

Question 1

The accrued income scheme deals with …

Answer 1

disposals and acquisitions by taxpayers of certain
securities and determines how we deal with accrued interest on a sale or purchase of stocks and bonds.

Question 2

The scheme applies to …

Answer 2

individuals, trusts and estates (not to companies).

Question 3

If an investor buys stock ‘cum-div’

If an investor buys loan stock ‘ex-div’,

Answer 3

they are buying the stock WITH the right to receive the
next interest payment.

they are buying the stock WITHOUT the right to receive the next interest payment.

Question 4

The accrued income scheme calculates ….

Answer 4

the ‘accrued interest’ every time stock is bought and sold and allocates this interest between buyer and seller.

The accrued income is effectively the increase or reduction in the price of the stock depending on whether the stock has been purchased or sold cum-div or ex-div.

Question 5

Sellers
Cum-dividend sales
Ex-dividend sales

Answer 5

Tax accrued amount
deduct rebate amount

Question 6

Buyers
Cum-dividend purchases
Ex-dividend purchases

Answer 6

Deduct rebate amount
Tax accrued amount

Question 7

Accrued income charges are taxed in the year …

Answer 7

in which the next interest payment falls.

Question 8

Accrued income rebates are deducted from the next interest payment.

Individuals are not caught by the accrued income scheme if the nominal value of their total holdings

Answer 8

does not exceed £5,000 at any time in both:
i. the tax year in which the next interest date falls; and
ii. the previous tax year.

Question 9

Beneficiaries of deceased estates

Executors are appointed by the deceased in the Will.
Beneficiaries are taxed on income ….

Distributions are deemed to come from

Income payments to beneficiaries are net of tax. The tax credit is …..

Payments (and tax credits) are certified by the Executors on form ____

Expenses are deemed to have been paid out of ______

Answer 9

actually distributed by the Executors during the administration period.

non-savings income in priority to interest and dividends, and from interest in priority to dividends.

20% for non-savings income and interest and 8.75% for dividends.

R185

dividend income, in priority to interest income, in priority to non-savings income