SAIM4130 - Accrued Income Scheme: calculating accrued income profits and losses: examples

Taxation of accrued income profits and losses: examples

Example 1

Antoinette has £100,000 Treasury Stock 7¾ % 2006, which has interest dates of 8 March and 8 September. She makes the following transactions in the stock.

Transaction Profit/loss
19 March 2006 sells £100,000 £233
21 March 2006 buys £50,000 (£138)
12 May 2006 sells £50,000 £690
Total £785


The aggregate profit is £785, taxable for 2006-07, the tax year in which the interest period ended, even though two of the transactions occur in 2005-06.

Example 2

Jean made the following transactions in securities between 19 March 2005 and 5 April 2006.

19 March 2005: bought £100,000 Treasury Stock 7½% 2006 (interest payment dates 7 June and 7 December)

26 May 2005: bought £50,000 Treasury Stock 7½% 2006 ex div

15 September 2005:sold £20,000 Treasury Stock 7½% 2006

22 September 2005: bought £50,000 Treasury Stock 4½ % 2007 (interest payment dates 7 March and 7 September)

The profits and losses arising on these transactions are:

Transaction date Interest period Profit/loss
19 March 2005 08/12/04 - 07/06/05 (£2,095)
26 May 2005 08/12/04 - 07/06/05 £123
15 September 2005 08/06/04 - 07/12/05 £410
22 September 2005 08/09/04 - 07/03/05 (£92)


The profits and losses for 2005-06 are:

  • Loss of £1,972 (2,095 minus £123) against interest of £5625 (£150,000 x 7.5% x 1/2) received on Treasury Stock 7½% 2006 on 7 June 2005

  • Profit of £410 (Treasury Stock 7½% 2006, interest period 8 June 2005 - 7 December 2005)

  • Loss of £92 against interest of 31125 received on Treasury Stock 4½ % 2007 on 7 March 2006.

Example 3

See Example 3 in SAIM4160. Joe Smith sells £4,000 unsecured loan stock in Stuffed Dodos Ltd to his Aunt Matilda on 19 August 2015. Interest is payable on 5 April 2015 and 18 April 2016. Neither Joe nor Matilda had any other transactions in securities.

The settlement day falls within the interest period 5 April 2015 to 4 April 2016. Joe is taxable on £79 for 2015-16 in respect of this interest period.

Matilda's loss of £79 is carried forward to 2016- 17 to be set against the interest receivable for the period 5 April 2015 to 18 April 2016 (ITA07/S637 - see SAIM4120).