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HMRC internal manual

Savings and Investment Manual

HM Revenue & Customs
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Accrued Income Scheme: special types of transfer: transfers to and from excluded persons

Transfers to and from excluded persons

There are special rules for transfers by persons who transfer securities to or fromthemselves in different capacities. These are traders, trustees, and charities, who areexcluded from being transferors or transferees under the Accrued Income Scheme (SAIM4220). In such cases an AIS charge arises on the person makingthe transfer in their non-exempt capacity.

Appropriations to and from trading stock

ITA07/S650 modifies the normal rules on transfers where securities which were acquiredby a person otherwise than as trading stock are appropriated for use as trading stock in atrade. The person is to be treated as transferring and reacquiring the securitiesotherwise than in the course of the trade on the day the appropriation is made. Thetrader’s deemed re-acquisition of the securities will be outside the scope of the AISby virtue of ITA07/S642.

Similarly, where securities which form part of the trading stock of a financial trade areappropriated by the trader for other purposes or are retained by him when the tradeceases, he is treated as if he had the securities transferred to him, otherwise than inthe course of the trade, on the day they cease to be held as trading stock. Such transferswill normally be ‘with accrued interest’ unless exceptionally the securitieswere acquired on the dividend payable next after the day on which appropriation occurs.

Owner becoming entitled to securities as trustee

ITA07/S651 applies where the owner of securities settles the securities on trust and isor becomes trustee of them. A transfer of the securities is treated as made by the ownerof the securities.

Securities ceasing to be held on charitable trusts

ITA07/S652 deals with the cases where securities are held on trusts that cease to becharitable.

In such cases the trustees are treated as transferring the securities (in their charitablecapacity) to themselves (in their non-charitable capacity). The effect is that accruedincome is exempt up to the date of the transfer from the charitable trusts.