the figures you mentioned are coupon received when you hold a bond. in simple terms, it is interest income on bonds. coupon is calculated on nominal value of bond i.e. £120,000 the rate is 2.5% per annum. in the example this is payable half yearly(june1.25% and december1.25%). if you hold the stock for 5 months (july to november) you are entitled to 5 months of interest. but here is the tricky part, when you sell it, the purchaser pays you the interest of 5 months which was due, hence £1,250 (already included in the proceeds). now the new holder of the bond will receive £1500 on december, but as he already paid £1250 to the seller he is only assessed on the £250 extra received.

Hello,I would like to know what has happened to the profit on sales of that stocks because he brought it for 125k and sold it for 127k, so how do we treat that 2k for TAX purpose?

if im not wrong, in the first 2lines it clearly says that gilt edge securities are exempt from capital gains tax (CGT) when sold. you are only taxed on the interest income part

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samkhn says

Sir, what is the 1250 figure concerned with and what is the 1500 figure of, and what does 250 means ?

soheb20092 says

the figures you mentioned are coupon received when you hold a bond. in simple terms, it is interest income on bonds. coupon is calculated on nominal value of bond i.e. £120,000 the rate is 2.5% per annum. in the example this is payable half yearly(june1.25% and december1.25%). if you hold the stock for 5 months (july to november) you are entitled to 5 months of interest. but here is the tricky part, when you sell it, the purchaser pays you the interest of 5 months which was due, hence £1,250 (already included in the proceeds). now the new holder of the bond will receive £1500 on december, but as he already paid £1250 to the seller he is only assessed on the £250 extra received.

donald says

great

Maruf Hossain says

Hello,I would like to know what has happened to the profit on sales of that stocks because he brought it for 125k and sold it for 127k, so how do we treat that 2k for TAX purpose?

soheb20092 says

if im not wrong, in the first 2lines it clearly says that gilt edge securities are exempt from capital gains tax (CGT) when sold. you are only taxed on the interest income part

shabeeba says

where do i get the solutions from??

zoe says

From the study notes. Starting from Page 167.