Bondwashing rules give investors tax allowances

Investors will have greater scope to offset income tax liabilities that arise from direct bond inves...

Investors will have greater scope to offset income tax liabilities that arise from direct bond investments under the Inland Revenue's plans to revamp its bondwashing rulings. Bondwashing is the practice of avoiding tax on interest arising from gilt and corporate bonds by effectively taking it as capital. One way to do this has been to sell the debt instruments just before they go ex-dividend thereby selling them with the income still priced into the bond, meaning investors are liable for capital gains rather than income tax. This can then be offset against the investor's capital gains ...