What does dirty price / clean price mean?
The market price of a fixed interest security may include the accrued interest since the last coupon date. Some bond markets include accrued interest in the trading price and others add it on explicitly after trading. The price including accrued interest is known as the “flat” or “dirty price”. The price excluding accrued interest is sometimes known as the “clean price”.
All sub-ordinated bonds and PIBs I am aware of trade on a ‘clean’ basis (that is with accrued interest to be added to the market price). Most preference shares trade on a ‘dirty’ basis. However there are currently a few exceptions in cases where the preference shares are traded on bond markets which quote all prices on a clean basis.
Where you purchase a security which trades ‘clean’ and pay accued interest there will be added complications for entering the interest correctly on your tax return. The best guidance I have found on this subject is on the HMRC website as follows: