bond washing

Section 2.3 of chapter 2 on page 9 explains why we have the accrued income scheme which is to overcome the problem of bond washing - which is selling the security prior to the interest payment being made to convert what would have been taxable interest income into a non taxable gain as the disposal of the security is exempt CGT. The accrued income scheme removes the accrued interest from the sale proceeds of the security and treats it instead as income