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HMRC internal manual

Enquiry Manual

Recalculating Profits: Private Side - Capital Statements: Investment Income

You should as far as possible work on the basis of money received and money paid out. Investment income which is received net should be brought in to the capital statement in that form, rather than bringing it in gross and treating the tax deducted as an expense. The latter method leads to errors.

Investment income should not be deducted from closing capital, but should be treated as income.