An AIS charge is triggered by ‘transfers’ of
securities. Most transfers result from sales or purchases.
ITA07/S620 defines ‘transfer' as
Securities are treated as transferred when the agreement to
transfer is made, and not on a later actual transfer. The AIS is
based on transfers of the legal ownership of securities, not the
transfer of the underlying beneficial ownership. Thus, for example,
there is no transfer for the purposes of the AIS if a beneficiary
under a trust becomes absolutely entitled as against the trustees
to securities forming part of the trust fund.
There are different rules for calculating the accrued income
tax charge on each of four different kinds of transfer –
transfers with accrued interest, transfers without accrued
interest, transfers with unrealised interest, and transfers of
variable rate securities. See
SAIM4060.
Where there is a conversion of securities within the meaning of
TCGA92/S132 (see CG55016 onwards), ITA07/S620 (4) deems the old
securities to have been transferred by the holder on the day of the
conversion, and ITA07/S621 (2) deems the transferor to be the
person entitled to the securities immediately before conversion.
The charge thus arising is taxable for the year in which the
conversion occurs. There is no deemed relief if old securities are
converted into new securities which remain within the scope of the
AIS.
The transfer will be treated as ‘with accrued interest'
unless, exceptionally, the securities were acquired without the
accrued interest which, but for the conversion, would have become
payable on the next interest payment date after the conversion.
In the case of redemption of variable rate securities, ITA07/S621 (3) deems the transfer to take place on the day of redemption, and the transferor is the person entitled to the securities immediately before the redemption is made.
See SAIM4240 onwards for special rules which affect who is treated as the transferor or transferee. These are rules on
