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HMRC internal manual

Savings and Investment Manual

Accrued Income Scheme: remittance basis: further examples

Further examples of the application of the remittance basis to the AIS

It is unlikely that there are many situations where UK and foreign securities will be ‘securities of the same kind’ for the purposes of the AIS scheme. It may, however, happen in the case of bearer securities. The following example outlines such a situation.

Sam has both overseas and UK bonds ‘of the same kind’ and they are disposed of in the same interest period with the following results.

Example 3

Security Proceeds (£’000) Amount A (£’000) Amount B (£’000)
X (overseas) 100 7  
Y (overseas) 200 - (10)
Z (UK) 70 4  

In this case the accrued income profit of £1,000 does not arise as the result of a transfer of foreign securities. There is a net Amount B of £3,000 as the result of the transferred foreign securities. There is therefore no relevant foreign income which Sam might remit to the UK. There is a UK accrued income profit of £1,000 which is taxable on an arising basis.

Payment into separate accounts of capital and accrued income elements

The disposal of a bond may be structured such that separate payment is made for the capital and the accrued income elements which may be paid into separate accounts. In this situation ITA07/S632 provides that the taxable amount shall be taken as the amount of gross interest accruing to the settlement day, which is separately identified as such.

An individual who has received separate payments into two separate accounts in this way will not be regarded as having two mixed funds. In this situation a remittance of the capital element will not be regarded as a remittance of relevant foreign income.