Income Tax Act 2007 section 639

Small holdings: individuals

Section 639 provides a small holdings exemption for individuals, excluding them from the accrued income scheme where the nominal value of their securities does not exceed £5,000.

• Individuals are excluded from the accrued income scheme if the total nominal value of all securities they hold does not exceed £5,000 on any day in the relevant tax year or the previous tax year.
• The relevant tax year depends on the type of transfer: for transfers with or without accrued interest, it is the year in which the interest period ends; for transfers with unrealised interest, it is the year in which the settlement day falls.
• For variable rate securities, the relevant tax year is the year in which the interest period ends (if the settlement day falls within an interest period), or otherwise the year in which the settlement day falls.
• Where interest on securities held by one individual would be treated for income tax purposes as another individual's income, both individuals' holdings are aggregated when testing against the £5,000 threshold.