Income and Corporation Taxes Act 1988

[F1 477A Building societies: regulations for deduction of tax. U.K.

(1) The Board may by regulations make provision with respect to any year of assessment requiring any building society—

(a) in such cases as may be prescribed by the regulations to deduct out of any dividend or interest paid or credited in the year in respect of shares in, or deposits with or loans to, the society a sum representing the amount of income tax on it, and

(b) to account for and pay any amount required to be deducted by the society by virtue of this subsection.

[F2 (1A) Regulations under subsection (1) above may not make provision with respect to any dividend or interest paid or credited, on or after the day on which the Finance Act 1991 was passed, in respect of a security (other than a qualifying certificate of deposit [F3 and other than a qualifying deposit right]]) which was quoted, or capable of being [F4 listed], on a recognised stock exchange at the time the dividend or interest became payable.

(2) Regulations under subsection (1) above may—

(a) make provision with respect to the furnishing of information by building societies or their investors, including, in the case of societies, the inspection of books, documents and other records on behalf of the Board;

(b) contain such incidental and consequential provisions as appear to the Board to be appropriate, including provisions requiring the making of returns.

[F5 (2A) Without prejudice to the generality of subsection (2)(a) above, regulations under subsection (1) above may make provision with respect to the furnishing of information to or by building societies corresponding to any provision that is made by, or may be made under, section 482 with respect to the furnishing of information to or by deposit-takers.]

(3) For any year of assessment to which regulations under subsection (1) above apply, dividends or interest payable in respect of shares in, or deposits with or loans to, a building society shall be dealt with for the purposes of corporation tax as follows—

[F6 (a) [F7 to the extent that it would not otherwise fall to be so regarded,] liability to pay the dividends or interest shall be treated for the purposes of Chapter II of Part IV of the Finance Act 1996 as a liability arising under a loan relationship of the building society;

(aa) if the dividends or interest are payable to a company, [F8 then, to the extent that they would not otherwise fall to be so regarded,] they shall be treated for those purposes as payable to that company in pursuance of a right arising under a loan relationship of that company;]

(b) no part of any such dividends or interest paid or credited in the year of assessment shall be treated as a distribution of the society or as franked investment income of any company resident in the United Kingdom.

[F9 (3A) F10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3B) F10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3C) F10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

(4) Subsection (3)(a) above shall apply to any [F11 interest] paid by the society under a certified [F12 SAYE savings arrangement] as if it were a dividend on a share in the society.

(5) F13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) F13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) Notwithstanding anything in sections 348 to 350, for any year of asessment to which regulations under subsection (1) above apply income tax shall not be deducted upon payment to the society of any interest on advances, being interest payable in that year.

(8) F14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9) In this section “dividend” has the meaning given by regulations under subsection (1) above F15 . . . .

[F16 (10) In this section—

• [F17 “certified SAYE savings arrangement” has the meaning given by section 703 of ITTOIA 2005

• “qualifying certificate of deposit” has the same meaning as in section 349, and

• F18 “qualifying deposit right” has the meaning given by section 349(4), reading “paid” as “paid or credited”, and]

• “security” includes share.]]

Textual Amendments

F1 S. 477A inserted (with effect in accordance with Sch. 5 para. 4(2) of the amending Act) by Finance Act 1990 (c. 29), Sch. 5 para. 4(1)

F2 S. 477A(1A) inserted by Finance Act 1991 (c. 31, SIF 63:1), s. 52(1), Sch. 11 para. 2(2)

F3 Words in s. 477A(1A)(3A) inserted (16.7.1992) by Finance (No. 2) Act 1992 (c. 48), s. 34, Sch. 8 paras. 3(2), 6

F4 Word in s. 477A(1A) substituted (with effect in accordance with Sch. 38 para. 6(7) of the amending Act) by Finance Act 1996 (c. 8), Sch. 38 para. 6(1)(2)(g)

F5 S. 477A(2A) inserted (28.7.2000) by Finance Act 2000 (c. 17), s. 111(4)

F6 S. 477A(3)(a)(aa) substituted for s. 477A(3)(a) (with effect in accordance with s. 105(1) of the amending Act) by Finance Act 1996 (c. 8), Sch. 14 para. 28(1) (with Sch. 15)

F7 Words in s. 477A(3)(a) inserted (with effect in accordance with s. 82(2) of the amending Act) by Finance Act 2002 (c. 23), Sch. 25 para. 47(2)

F8 Words in s. 477A(3)(aa) inserted (with effect in accordance with s. 82(2) of the amending Act) by Finance Act 2002 (c. 23), Sch. 25 para. 47(3)

F9 S. 477A(3A)-(3C) inserted by Finance Act 1991 (c. 31, SIF 63:1), s. 52(2)(3)

F10 S. 477(3A)-(3C) repealed with effect in accordance with s. 105(1) of the repealing Act) by Finance Act 1996 (c. 8), Sch. 14 para. 28(2), Sch. 41 Pt. 5(3), Note (with Sch. 15)

F11 Words in s. 477A(4) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 184(2)(a) (with Sch. 2)

F12 Words in s. 477A(4) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 184(2)(b) (with Sch. 2)

F13 S. 477A(5)(6) repealed (6.4.2005 with effect in accordance with s. 883(1) of the repealing Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 184(3), Sch. 3 (with Sch. 2)

F14 S. 477(8) repealed (with effect in accordance with s. 38(3)(4) of the repealing Act) by Finance Act 1999 (c. 16), Sch. 20 Pt. 3(7), Note 4

F15 Words in s. 477A(9) repealed (6.4.2005 with effect in accordance with s. 883(1) of the repealing Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 184(4), Sch. 3 (with Sch. 2)

F16 S. 477A(10) inserted by Finance Act 1991 (c. 31, SIF 63:1), s. 52(1), Sch. 11 para. 2(3)

F17 S. 477A(10): definition of "certified SAYE savings arrangement" inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 184(5) (with Sch. 2)

F18 S. 477A(10): definition of "qualifying deposit right" inserted (16.7.1992) by Finance (No. 2) Act 1992 (c. 48), s. 34, Sch. 8 paras. 3(3), 6

Modifications etc. (not altering text)

C1 S. 477A applied (with effect in accordance with s. 56 of the affecting Act) by Finance Act 2005 (c. 7), Sch. 2 para,. 5

C2 See 1990 Sch.5 para.16(1), (2), (3)—regulations may also require building societies to account for tax on transitional sums.

C3 See 1990 Sch.5 para.16(1), (4), (5)—for the year 1991-92,the words from

“actual”

to the end of the paragraph are replaced by

“appropriate amount”;and the following subs. is inserted after subs.(3):— “(3A) In subsection (3)(a) above the reference to the appropriate amount is to the actual amount paid or credited in the accounting period of any such dividends or interest together with—(a) in the case of dividends or interest paid or credited in the year 1990-91, any amount accounted for and paid by the society in respect thereof as representing income tax, and (b) in the case of dividends or interest paid or credited in the year 1991-92, any amount of income tax accounted for and paid by the society in respect thereof.”