Query on reporting "purchase accrued interest" of a corporate bond on self-assessment taxreport

Dear HMRC, Please can you advise how to report the "purchase accrued interest" of the corporate bond in the tax return. For example, if a bond pays interest twice a year, and a person purchased the bond in between interest payment dates, the buyer of the bond would typically pay the interest that has accumulated up to the date of the sale to the seller (i.e. "purchase accrued interest"). If a person pay the "purchase accrued interest" in the current tax year and only receive the interest payment (which will include the "purchase accrued interest" and the accrued interest that has accumulated since the purchase) in the next tax year. Thank you for your assistance in this matter. Kind regards, 

Hi,

Interest should be reported in the tax year that it is received. However, if the type of bonds means that you cannot access the funds to make a withdrawal then it will be the year in which it matures.

Please see guidance at:

SAIM2440 - Interest: taxation of interest: when interest arises

Thank you.

Hi, Thank you very much for your reply. I am writing further to inquire if a person had negative interest, about should he/she report it on his/her tax return. For instance, the negative interest may due to a person paid "purchase accrued interest" in current tax year but only receive the actual interest payment in the next tax year. Thank you for your time and assistance.

Hi,

UK income tax is calculated using the arising basis.  

This means that if the interest is paid in the next tax year, then that is the year it is taxable.

Thank you.