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HMRC internal manual

Capital Gains Manual

Securities: Accrued Income Scheme: transfer with accrued interest

For Capital Gains Tax purposes the following adjustments are required.

  • Transferor - the disposal proceeds are reduced by the deemed sum
  • Transferee - the acquisition cost is reduced by the amount of the relief.


  • 1 January 1989 Mr Allen buys £100,000 UK Computer PLC 10 per cent convertible loan stock for £108,000. Interest payments are made on 1 January and 1 July.
  • 13 March 1990 Mr Allen sells the loan stock at a `clean price’, see IM4235, of £106,000. He also receives a payment of £1,972 representing 72 days accrued interest. Total proceeds £107,972.
  • The Accrued Income Scheme treats Mr Allen as having received a sum of £1,972.

Capital Gains Tax computation

Disposal proceeds 107,972
less Accrued Income* 1,972
less Cost 108,000
Unindexed loss (2,000)
less Indexation** 9,964
Allowable loss (11,964)
  • TCGA92/S119 (2)(a)

** January 1989 - March 1990 - 0.094

The purchaser will have paid a total of £107,972 for the loan stock. They will have received £1,972 Accrued Income Scheme relief. Therefore, their acquisition cost for Capital Gains Tax purposes is reduced to £106,000. Indexation allowance will be given on £106,000.

NOTE. If a taxpayer is within the charge to Capital Gains Tax, neither indexation allowance nor taper relief apply to disposals of assets on or after 6 April 2008. Previously indexation allowance had been frozen at April 1998. Companies and other concerns within the charge to Corporation Tax are not affected by these changes. For indexation allowance see CG17207+ and for taper relief see CG17895+.