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Income Tax Bill


Income Tax Bill
Part 14 — Deduction of income tax at source
Chapter 2 — Deduction by deposit-takers and building societies

403

 

Other investments which are not relevant investments

796     

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

5

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

10

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

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account it is.

797     

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 920).

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798     

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 919).

799     

Qualifying time deposits

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(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,

30

(c)   

those terms do not make provision for the transfer of the right to

repayment, and

(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

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£50,000 at the time the deposit is made.

800     

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.

 
 

Income Tax Bill
Part 14 — Deduction of income tax at source
Chapter 2 — Deduction by deposit-takers and building societies

404

 

(2)   

In this section “premium trust fund” has the meaning given in section 184 of

FA 1993.

801     

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

5

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

10

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.

15

(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.

802     

Sale and repurchase of securities

(1)   

An investment is not a relevant investment if it is a loan which is treated as

20

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

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(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).

803     

Other investments

30

(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

35

(c)   

it is a debt on a debenture issued by the deposit-taker (see section 956).

(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 925), 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.

40

 
 

Income Tax Bill
Part 14 — Deduction of income tax at source
Chapter 2 — Deduction by deposit-takers and building societies

405

 

Supplementary

804     

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

5

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

(c)   

generally for giving effect to this Chapter.

(2)   

Regulations under this section may contain incidental, supplemental,

10

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 791(5),

(b)   

section 792(5),

15

(c)   

section 793(4), or

(d)   

section 794(5).

805     

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

20

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

25

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 785 (power to make

regulations disapplying section 784).

30

(5)   

An order under this section may not amend section 803(2)(b) for the purpose

of providing that securities of the kind mentioned in that provision are relevant

investments.

806     

Discretionary or accumulation settlements

(1)   

A settlement is a discretionary or accumulation settlement for the purposes of

35

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

40

than income arising under a trust established for charitable purposes

 
 

Income Tax Bill
Part 14 — Deduction of income tax at source
Chapter 3 — Deduction from certain payments of yearly interest

406

 

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)).

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.

10

(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.

15

(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

20

Duty to deduct sums representing income tax

807     

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,

25

(b)   

by a local authority,

(c)   

by or on behalf of a partnership of which a company is a member, or

(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

30

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 808 to 821 as to circumstances in which the duty to deduct a

sum under this section is disapplied, and

35

(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

40

accounts of authorised investment funds as payments of yearly

interest, and

 
 

Income Tax Bill
Part 14 — Deduction of income tax at source
Chapter 3 — Deduction from certain payments of yearly interest

407

 

(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

5

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)—

10

(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

15

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

20

808     

Interest paid by building societies

The duty to deduct a sum representing income tax under section 807 does not

apply to a payment of interest made by a building society.

809     

Interest paid by deposit-takers

(1)   

The duty to deduct a sum representing income tax under section 807 does not

25

apply to a payment of interest in respect of which a deposit-taker has a duty to

deduct under section 784.

(2)   

The duty to deduct a sum representing income tax under section 807 does not

apply to a payment in respect of which a deposit-taker would have a duty to

deduct under section 784 but for—

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(a)   

regulations under section 785, or

(b)   

any of sections 791 to 794.

810     

UK public revenue dividends

The duty to deduct a sum representing income tax under section 807 does not

apply to a payment of interest in respect of a UK public revenue dividend.

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811     

Interest paid by banks

(1)   

The duty to deduct a sum representing income tax under section 807 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 925 (meaning of “bank”) applies for the purposes of this section.

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