CG54500 - Securities: Accrued Income Scheme: general

TCGA92/S119

The Accrued Income Scheme changes the basis on which interest which has accrued up to the date of sale of most marketable securities is taxed. Instead of forming part of the sale proceeds or purchase price charged to Capital Gains Tax it is now treated as income. Full guidance can be found at SAIM4000. The special rules of TCGA92/S119 apply to the Capital Gains Tax treatment of disposals and acquisitions of securities within the scope of the Accrued Income Scheme. Their broad aim is to adjust the Capital Gains Tax disposal consideration and acquisition cost to exclude amounts covered by the Accrued Income Scheme.

Most securities other than shares including preference shares are within the scope of the Accrued Income Scheme. However, many of the securities covered by the scheme will be exempt from Capital Gains Tax either because they are Gilts, see CG54900 or qualifying corporate bonds, CG53700. In particular sterling denominated non-convertible loan notes, loan stock and debentures are likely to be qualifying corporate bonds.

The operation of the Accrued Income Scheme is triggered by a transfer. The commonest type of transfer will be a sale but it also includes exchanges, gifts and other events deemed to be transfers.