Taxation of Chargeable Gains Act 1992 section 119

Transfers of securities subject to the accrued income scheme

Section 119 sets out how the capital gains tax computation is adjusted when securities are transferred and the accrued income scheme applies, so that amounts already taxed as income are not also subject to CGT.

• When securities are sold or otherwise transferred, any accrued interest taxed as income under the accrued income scheme is stripped out of the CGT disposal proceeds for the seller and out of the acquisition cost for the buyer, preventing the same amount from being taxed twice.
• Where securities are transferred with unrealised interest (interest that has become due but where settlement occurs after the interest payment date), the CGT figures are adjusted by excluding the unrealised interest element from disposal consideration or allowable expenditure as appropriate.
• Disposals that are not formal transfers for accrued income scheme purposes (such as deemed disposals) are nevertheless treated as if they were transfers where the scheme would have applied, and the same CGT adjustments are made accordingly.
• On a conversion or exchange of securities that does not count as a disposal for CGT purposes, any accrued income amount is treated as reducing the consideration received (or, if it exceeds that consideration, as additional consideration given) so that the income element is properly separated from the capital element.