Income Tax Act 2007 (c. 3)

(The document as of February, 2008)

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(a) by an officer of Revenue and Customs who is named in the notice, and

(b) within such time as the notice may specify.

(3) An officer of Revenue and Customs to whom the declarations must be made available may take copies or extracts from them.

Other investments which are not relevant investments

863 General client account deposits

(1) An investment is not a relevant investment if it is a general client account deposit.

(2) An investment is a general client account deposit for the purposes of this section if--

(a) it is a deposit held by a deposit-taker or building society in a client account, and

(b) provision made under any enactment requires the person whose account it is to make payments representing interest to some or all of the clients for whom, or on whose account, that person received the sums deposited in the account.

(3) But an investment is not a general client account deposit if the account in which it is held is identified by the deposit-taker or building society as one in which sums are held only for one or more particular clients of the person whose account it is.

864 Qualifying uncertificated eligible debt security units

An investment is not a relevant investment if it is a deposit in respect of which a deposit-taker or building society has issued a qualifying uncertificated eligible debt security unit (see section 986).

865 Qualifying certificates of deposit

An investment is not a relevant investment if it is a deposit in respect of which a deposit-taker or building society has issued a qualifying certificate of deposit (see section 985).

866 Qualifying time deposits

(1) An investment is not a relevant investment if it is a qualifying time deposit.

(2) An investment is a qualifying time deposit for the purposes of this section if--

(a) it is a deposit consisting of a loan of at least £50,000,

(b) the terms of the deposit require its repayment at a specified time within 5 years beginning with the date on which it is made,

(d) those terms prevent partial withdrawals of, or additions to, the deposit.

(3) If a deposit is denominated in a foreign currency, subsection (2)(a) has effect as if it referred to an amount which is at least the equivalent in that currency of £50,000 at the time the deposit is made.

867 Lloyd's premium trust funds

(1) An investment is not a relevant investment if it forms part of a premium trust fund of an underwriting or former underwriting member of Lloyd's.

(2) In this section "premium trust fund" has the meaning given in section 184 of FA 1993.

868 Investments held outside the United Kingdom

(1) An investment with a deposit-taker is not a relevant investment if--

(a) the deposit-taker is UK resident for income tax purposes or corporation tax purposes, and

(b) the investment is held at a branch of the deposit-taker situated outside the United Kingdom.

(2) An investment with a deposit-taker is not a relevant investment if--

(a) the deposit-taker is non-UK resident for income tax purposes or corporation tax purposes, and

(b) the investment is not held at a branch of the deposit-taker situated in the United Kingdom.

(3) An investment with a building society is not a relevant investment if it is held at a branch of the building society situated outside the United Kingdom.

(4) For the purposes of this section an investment is held at a branch of a deposit-taker or building society if the investment is recorded in its books as a liability of that branch.

869 Sale and repurchase of securities

(1) An investment is not a relevant investment if it is a loan which is treated as made to a building society by virtue of section 607 (treatment of price differences under repos).

(2) An investment is not a relevant investment if it is an amount of cash which is--

(a) received by a building society in connection with a repo in circumstances where section 607 applies, and

(b) required as a result of a variation in the value of the securities in respect of which the repo is made as security for performance by the parties to the repo of their obligations under it.

(3) In this section "repo" has the same meaning as in Part 11 (see section 569).

870 Other investments

(1) An investment with a deposit-taker is not a relevant investment if--

(a) it is a loan made by a deposit-taker in the ordinary course of its business or activities,

(b) it is a debt on a security which is listed on a recognised stock exchange, or

(2) An investment with a building society is not a relevant investment if--

(a) it is a loan made by a bank (as defined in section 991), or

(b) it is a security (including a share) issued by a building society which is listed, or capable of being listed, on a recognised stock exchange.

Supplementary

871 Power to make regulations to give effect to Chapter

(1) The Commissioners for Her Majesty's Revenue and Customs may by regulations make provision--

(a) about the giving of information by deposit-takers, building societies and appropriate persons,

(b) about the inspection of deposit-takers' and building societies' books, documents and other records by officers of Revenue and Customs, and

(2) Regulations under this section may contain incidental, supplemental, consequential and transitional provision and savings.

(3) In this section "appropriate person" means a person who, in relation to an investment, falls within any of the following--

(a) section 858(5),

(b) section 859(5),

(d) section 861(5).

872 Power to make orders amending Chapter

(1) The Treasury may by order amend this Chapter for the purposes of providing that investments of a kind specified in the order are, or are not, relevant investments.

(2) An order under this section which amends this Chapter in its application to deposit-takers may do so--

(a) in relation to all deposit-takers, or

(b) in relation to such deposit-takers or classes of deposit-taker as the order may specify.

(3) An order under this section may contain incidental, supplemental, consequential and transitional provision and savings.

(4) An order under this section may not amend section 852 (power to make regulations disapplying section 851).

(5) An order under this section may not amend section 870(2)(b) for the purpose of providing that securities of the kind mentioned in that provision are relevant investments.

873 Discretionary or accumulation settlements

(1) A settlement is a discretionary or accumulation settlement for the purposes of this Chapter if any income arising to the trustees would (unless treated as income of the settlor) be to any extent income within subsection (2) for the tax year in which it arises.

(2) Income is within this subsection so far as it is--

(a) accumulated or discretionary income as defined in section 480 (other than income arising under a trust established for charitable purposes only or an unauthorised unit trust in relation to which section 504 applies), or

(b) an amount of a type set out in section 482 (unless the trust is a unit trust scheme or the amount is income arising under a trust established for charitable purposes only or is excluded by section 481(5)).

(3) A person is a beneficiary under a discretionary or accumulation settlement for the purposes of this Chapter if--

(a) the person is an actual or potential beneficiary under the settlement, and

(b) condition A or B is met in relation to the person.

(4) Condition A is that the person is, or will or may become, entitled under the settlement to receive some or all of any income under the settlement.

(5) Condition B is that some or all of any income under the settlement may be paid to or used for the benefit of the person in the exercise of a discretion conferred under the settlement.

(6) The references in subsections (4) and (5) to any income under the settlement include a reference to any capital under the settlement so far as it represents amounts originally received by the trustees as income.

Chapter 3 Deduction from certain payments of yearly interest

Duty to deduct sums representing income tax

874 Duty to deduct from certain payments of yearly interest

(1) This section applies if a payment of yearly interest arising in the United Kingdom is made--

(a) by a company,

(b) by a local authority,

(d) by any person to another person whose usual place of abode is outside the United Kingdom.

(2) The person by or through whom the payment is made must, on making the payment, deduct from it a sum representing income tax on it at the savings rate in force for the tax year in which it is made.

(3) But see--

(a) sections 875 to 888 as to circumstances in which the duty to deduct a sum under this section is disapplied, and

(b) Chapter 11 (payments between companies etc) for a further exception from the duty to deduct under this section.

(4) See also regulations made under section 17(3) of F(No.2)A 2005 (authorised investment funds)--

(a) for provision treating certain amounts shown in the distribution accounts of authorised investment funds as payments of yearly interest, and

(b) for exceptions from the duty to deduct under this section which would otherwise apply to such payments.

(5) For the purposes of subsection (1) the following are to be treated as payments of yearly interest--

(a) a payment of interest made by a registered industrial and provident society in respect of any mortgage, loan, loan stock or deposit, and

(b) any interest, dividend, bonus or other sum payable to a shareholder of such a society by reference to the amount of the shareholder's holding in the share capital of the society.

(6) For the purposes of subsection (1)--

(a) a payment made by a company in a fiduciary or representative capacity is not to be treated as a payment made by the company, and

(b) a payment made by a local authority in a fiduciary or representative capacity is not to be treated as a payment made by the local authority.

(7) For provision about the collection of income tax in respect of a payment from which a sum must be deducted under this section--

(a) see Chapter 15 if the person making the payment is a UK resident company, and

(b) otherwise see Chapter 16.

Exceptions from duty to deduct

875 Interest paid by building societies

The duty to deduct a sum representing income tax under section 874 does not apply to a payment of interest made by a building society.

876 Interest paid by deposit-takers

(1) The duty to deduct a sum representing income tax under section 874 does not apply to a payment of interest in respect of which a deposit-taker has a duty to deduct under section 851.

(2) The duty to deduct a sum representing income tax under section 874 does not apply to a payment in respect of which a deposit-taker would have a duty to deduct under section 851 but for--

(a) regulations under section 852, or

(b) any of sections 858 to 861.

877 UK public revenue dividends

The duty to deduct a sum representing income tax under section 874 does not apply to a payment of interest in respect of a UK public revenue dividend.

878 Interest paid by banks

(1) The duty to deduct a sum representing income tax under section 874 does not apply to a payment of interest made by a bank if that payment is made in the ordinary course of its business.

(2) Section 991 (meaning of "bank") applies for the purposes of this section.

879 Interest paid on advances from banks

(1) The duty to deduct a sum representing income tax under section 874 does not apply to a payment of interest on an advance from a bank if, at the time when the payment is made, the person beneficially entitled to the interest is within the charge to corporation tax as respects the interest.

(2) Section 991 (meaning of "bank") applies for the purposes of this section.

(3) Subsection (1) applies to the European Investment Bank as if the words from "if" to the end were omitted.

(4) An order under subsection (2)(e) of section 991 designating an international organisation as a bank may provide that subsection (1) applies to the organisation with the modification mentioned in subsection (3).

880 Interest paid on advances from building societies

The duty to deduct a sum representing income tax under section 874 does not apply to a payment of interest on an advance from a building society.

881 National Savings Bank interest

The duty to deduct a sum representing income tax under section 874 does not apply to a payment of interest on deposits with the National Savings Bank.

882 Quoted Eurobond interest

The duty to deduct a sum representing income tax under section 874 does not apply to a payment of interest on a quoted Eurobond (see section 987).

883 Interest on loan to buy life annuity

The duty to deduct a sum representing income tax under section 874 does not apply to a payment of interest to which section 369 of ICTA applies (interest on loan to buy life annuity payable under deduction of tax).

884 Relevant foreign income

(1) The duty to deduct a sum representing income tax under section 874 does not apply to a payment of interest which is chargeable to income tax as relevant foreign income.

(2) For the meaning of "relevant foreign income", see section 989.

885 Authorised persons dealing in financial instruments

(1) The duty to deduct a sum representing income tax under section 874 does not apply to a payment of interest made by a person authorised for the purposes of FISMA 2000 if--

(a) the person's business consists wholly or mainly of dealing in financial instruments as principal, and

(b) the payment is made by that person in the ordinary course of that business.

(2) For the meaning of "financial instrument", see section 984.

886 Interest paid by recognised clearing houses etc

(1) The duty to deduct a sum representing income tax under section 874 does not apply to a payment of interest made by a recognised clearing house ("RCH") or recognised investment exchange ("RIE") if--

(a) the RCH or RIE is carrying on business as the provider of a central counterparty clearing service, and

(b) the interest is paid in the ordinary course of that business, on margin or other collateral deposited with it by users of the service.

(2) The duty to deduct a sum representing income tax under section 874 does not apply to interest treated by virtue of section 607 (treatment of price differences under repos) as paid by an RCH or RIE in respect of contracts made by it as the provider of a central counterparty clearing service.

(3) In this section--

"central counterparty clearing service" means the service provided by an RCH or RIE to the parties to a transaction where there are contracts between each of the parties and the RCH or RIE (in place of, or as an alternative to, a contract directly between the parties), and
"recognised clearing house" and "recognised investment exchange" have the same meaning as in FISMA 2000 (see section 285 of that Act).

887 Industrial and provident society payments

(1) The duty to deduct a sum representing income tax under section 874 does not apply to either of the following payments if they are payable to a person whose usual place of abode is in the United Kingdom--

(a) a payment of interest made by a registered industrial and provident society in respect of any mortgage, loan, loan stock or deposit, or

(b) any interest, dividend, bonus or other sum payable to a shareholder of such a society by reference to the amount of the shareholder's holding in the share capital of the society.

(2) A registered industrial and provident society must, within 3 months after the end of each of its accounting periods, deliver to an officer of Revenue and Customs a return containing the information mentioned in subsection (3).

(3) That information is--

(a) the name and place of residence of every person to whom the society has, as a result of this section, made one or more payments in the period amounting in total to at least £15 without deducting a sum (or sums) representing income tax, and

(b) the amount so paid in the period to each of those persons.

(4) See section 486(7) of ICTA as to the consequences of not making a return as required by subsection (2).

(5) In this Chapter "registered industrial and provident society" means a society registered or treated as registered under the Industrial and Provident Societies Act 1965 (c. 12) or the Industrial and Provident Societies Act (Northern Ireland) 1969 (c. 24 (N.I.)).

(6) For the purposes of this section crediting interest (or amounts treated as interest) counts as paying it.

888 Statutory interest

The duty to deduct a sum representing income tax under section 874 does not apply to a payment of interest made by virtue of the contractual term implied by section 1(1) of the Late Payment of Commercial Debts (Interest) Act 1998 (c. 20) (statutory interest).

Chapter 4 Deduction from payments in respect of building society securities

889 Payments in respect of building society securities

(1) This section applies to any payment made in a tax year if--

(a) it is a payment of a dividend or interest in respect of a security issued by a building society, and

(b) conditions A and B are met in relation to the security.

(2) Condition A is that the security was listed or capable of being listed on a recognised stock exchange at the time the dividend or interest became payable.

(3) Condition B is that the security is not--

(a) a qualifying certificate of deposit (see section 985),

(b) a qualifying uncertificated eligible debt security unit (see section 986), or

(4) The person by or through whom the payment is made must, on making it, deduct from it a sum representing income tax on it at the savings rate in force for the tax year.

(5) For provision about the collection of income tax in respect of a payment from which a sum must be deducted under this section--

(a) see Chapter 15 if the person making the payment is a UK resident company, and

(b) otherwise see Chapter 16.

(6) See also Chapter 11 (payments between companies) for an exception from the duty to deduct sums representing income tax under this section.

(7) In this section--

"dividend" includes any distribution (whether or not described as a dividend), and
"security" includes a share (and, in particular, a permanent interest bearing share as defined in section 117 of TCGA 1992).

Chapter 5 Deduction from payments of UK public revenue dividends

Introduction

890 Overview of Chapter

(1) This Chapter contains provision about the deduction of sums representing income tax from payments of UK public revenue dividends.

(2) Section 891 defines "UK public revenue dividend".

(3) Section 892 contains a duty to deduct sums representing income tax from payments of UK public revenue dividends unless they are payable gross.

(4) Sections 893 and 894 explain when such payments are payable gross.

(5) Sections 895 and 896 make provision for the making, and withdrawal, of applications for payments to be subject to the duty to deduct under this Chapter.

(6) Section 897 contains a regulation-making power in connection with payments from which sums must be deducted under this Chapter.

891 Meaning of "UK public revenue dividend"

In this Chapter "UK public revenue dividend" means any income from securities which--

(a) is paid out of the public revenue of the United Kingdom or Northern Ireland, but

(b) is not interest on local authority stock.

Duty to deduct sums representing income tax

892 Duty to deduct from certain UK public revenue dividends

(1) This section has effect if--

(a) a payment of a UK public revenue dividend is made, and

(b) it is not payable gross under section 893.

(3) For provision about the collection of income tax in respect of a payment from which a sum must be deducted under this section--

(a) see Chapter 15 if the person making the payment is a UK resident company, and

(b) otherwise see Chapter 16.

Payments which are payable gross

893 Payments of UK public revenue dividends which are payable gross

(1) A payment of a UK public revenue dividend is payable gross if--

(a) it is a payment of interest on gross-paying government securities, and

(b) no deduction at source application has effect in respect of the securities at the time the payment is made (see section 895).

(2) In this Chapter "gross-paying government securities" means--

(a) gilt-edged securities (see section 1024), or

(b) securities which are the subject of a Treasury direction under section 894(1) or (3).

894 Treasury directions

(1) The Treasury may direct that any securities to which subsection (2) applies are gross-paying government securities.

(2) This subsection applies to any securities, so far as they are not gilt-edged securities, issued or treated as issued under--

(a) the National Loans Act 1939 (c. 117), or

(b) the National Loans Act 1968 (c. 13).

(3) The Treasury may, at the request of the Department of Finance and Personnel for Northern Ireland, direct that any securities issued under section 11(1)(c) of the Exchequer and Financial Provisions Act (Northern Ireland) 1950 (c. 3 (N.I.)) are gross-paying government securities.

(4) In relation to any securities which are gross-paying government securities by virtue of a direction under subsection (3)--

(a) references in sections 895 and 896 to "the Registrar" are to be read as references to the bank in the books of which the securities are registered or inscribed, and

(b) references in those sections to the Treasury are to be read as references to the Department of Finance and Personnel for Northern Ireland.

(5) A direction under subsection (1) or (3) in respect of any securities may provide that the direction is to have effect in relation only to payments of interest on the securities made on or after a date specified in the direction.

Deduction at source applications

895 Deduction at source application

(1) The holder of registered gross-paying government securities may make a deduction at source application in respect of the securities.

(2) A deduction at source application in respect of any securities is an application--

(a) for payments of interest on those securities to be subject to the duty to deduct sums representing income tax under section 892,

(b) made to the Registrar, and

(3) A deduction at source application in respect of any securities has effect from the date which is one month after the date on which it is made until--

(a) the securities cease to be registered in the name of the person who made the application, or

(b) the application ceases to have effect under section 896 following its withdrawal in accordance with that section.

(4) If any registered gross-paying government securities are held on trust, the holders of the securities may make a deduction at source application in respect of them without the consent of any other person.

(5) Subsection (4) applies despite anything in the instrument creating the trust.

(6) In this Chapter--

"registered" means--
(a)
entered in the register of the Registrar, or
(b)
entered in a register maintained in accordance with regulations under section 207 of the Companies Act 1989 (c. 40) (transfer of securities without written instrument), and
"the Registrar" means the person or persons appointed in accordance with regulations under section 47(1)(b) of FA 1942 (see regulation 3 of the Government Stock Regulations 2004 (S.I. 2004/1611)).

896 Withdrawal of application

(1) A deduction at source application may be withdrawn by notice given to the Registrar by the holder of the securities.

(2) The notice must be given in such form as the Registrar may, with the approval of the Treasury, prescribe.

(3) If withdrawn, a deduction at source application ceases to have effect on the date which is one month after the date on which the notice of withdrawal is received by the Registrar.

Regulations

897 Power to make regulations

(1) The Commissioners for Her Majesty's Revenue and Customs may by regulations--

(a) make provision as to the time and manner in which persons are to account for and pay income tax in respect of payments from which they are required to deduct sums representing income tax under section 892, and

(b) otherwise modify the provisions of section 892 and Chapters 15 and 16 in their application to such payments.

(2) Regulations under this section may--

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