Illustration 3 Chapter 3 Kaplan Study Text - Ahmed sold £75,000 of 6% gilts

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Ahmed sold £75,000 of 6% gilts (including accrued interest) on 31 October 2024 for proceeds of £120,000. He originally acquired the gilts on 1 May 2023. Interest is payable on 30 June and 31 December each year. Calculate the amount assessed on Ahmed as interest income from this investment for the tax year 2024/26.
Solution Interest income – Ahmed 2025/26 £ Interest received – 30 June 2025 (£75,000 × 6% × 6/12) 2,250 Accrued interest included in selling price of gilts (accrued from 1 July 2025 – 31 October 2025) (£75,000 × 6% × 4/12) 1,500 ––––– Total interest income assessable for Ahmed 3,750 ––––– Note: For CGT purposes, the asset sale proceeds are reduced by the amount assessed to income tax, so his capital proceeds are £118,500 (£120,000 – £1,500). However, any gain or loss arising is exempt from CGT, as gilts are an exempt asset for individuals.