Taxes Consolidation Act 1997 Schedule 21 paragraph 4

How the appropriate amount is determined

Paragraph 4 of Schedule 21 provides that where the bargain price of securities is increased by reference to gross accrued interest, the rules in paragraphs 1 to 3 do not apply and the appropriate amount of interest is the amount of that increase.

• Where the quoted price of a security does not include accrued interest, the bargain price is increased by the gross interest accrued from the last payment date to the bargain date.
• In such cases, paragraphs 1 to 3 of Schedule 21 do not apply, because the interest element is already separately identifiable in the price.
• The appropriate amount in respect of the interest, for the purposes of sections 749 to 751, is the actual amount by which the bargain price has been increased.
• Interest in this context includes a distribution within the meaning of section 748(1).