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HMRC internal manual

Trusts, Settlements and Estates Manual

Trust income and gains: Accrued Income Scheme - unauthorised unit trusts: rate of charge

The way an unauthorised unit trust treats accrued interest in its accounts affects the rate of charge. Tax is not chargeable at the trust rate to the extent that the unit trust treats accrued interest as income. This occurs where the trust adopts:

  • a strict daily `full’ accruals basis. The trust takes income accrued up to the date of sale to income, or
  • `clean price’ accounting. The trust separately identifies and accounts for the capital and income elements in a sale of interest-bearing securities. In other words, the income is `stripped-out’.