For individuals, it remains the case that interest is not taxed on an accruals basis, but is only taxed when it is actually received.
The tax charge under ITTOIA 2005, s 370 is on the full amount of the interest arising in the tax year. SAIM2440 confirms that “interest ‘arises’ when it is received or made available to the recipient. Interest has been made available if it is credited to an account on which the account holder is free to draw”.
The position is entirely different for corporates under the loan relationshps regime, for which accruals accounting will be the norm.
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