Dear sir,
I have a question regarding accrued income scheme. I was attempting Kaplan Taxation study text, illustration # 7 in which there is mention calculate interest income for 20/21. Below i have exactly typed the question as it is in book.
My problem is that why they have included in first part of question all the 6 moths i.e., from jan to june. But tax year runs from april i.e., there should have been 3 months.
I would be very thankful if you solve my this problem.
Thank you
Naveed khan
Ahmed sold £15,000 6% loan stock cum interest on 31 October 2020 for proceeds
of £20,000. He originally acquired the loan stock on 1 May 2018. Interest is
payable on 30 June and 31 December each year.
Calculate the amount assessed on Ahmed as interest income for 2020/21.
Solution
Interest income – 2020/21
Interest received - 30 june 2020
(15000*6%*6/12) = 450
Accrued income included in selling price of loan stock
( from 1 july 2020 - 31 October 2020 15000*6%*4/12) 300
Total interest assessable to tax = 750
Ask the Tutor ACCA TX-UK
Accrued income scheme
The basis of assessment for interest (savings) income is actual amounts RECEIVED not accrued.
The accrued income scheme is a separate issue which is dealt with in the OT study notes and lectures in chapter 2 - have you worked through these notes and lectures?
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