Finance Act 1995

82 Manufactured interest on gilt-edged securities

(1) In section 737 of the Taxes Act 1988 (manufactured dividends and interest)—

(a) after subsection (1A) there shall be inserted the following subsection—

“(1B) Subject to subsection (5AA) below, subsection (1) above shall not apply where the interest in question is interest on gilt-edged securities.”;

(b) at the beginning of subsections (2) and (5), there shall be inserted, in each case, “Subject to subsection (5AA) below,”;

(c) after subsection (5) there shall be inserted the following subsection—

“(5AA) Regulations made by the Treasury may make provision in relation to any such case where the securities in question are gilt-edged securities as may be specified in the regulations—

(a) for subsections (1B), (2) and (5) above to be disregarded in determining whether the case is one where subsection (1) above applies; or

(b) for this section to have effect as if subsections (1B) and (2) above were omitted and the words in subsection (5) from “unless” to the end of paragraph (b) were modified in such manner as may be set out in the regulations.”;and

(d) in subsection (6), after the definition of “foreign income dividend” there shall be inserted the following definition—

““gilt-edged securities” has the same meaning as in section 51A;”.

(2) In Schedule 23A to that Act, at the beginning of sub-paragraphs (2) and (3) of paragraph 3, there shall be inserted, in each case, “Subject to paragraph 3A below,”; and after that paragraph there shall be inserted the following paragraph—

“3A (1) This paragraph applies, except in so far as dividend manufacturing regulations otherwise provide, in any case where paragraph 3 above applies and the United Kingdom securities in question are gilt-edged securities.

(2) In a case where this paragraph applies, sub-paragraphs (2) and (3) of paragraph 3 above shall not have effect, but the gross amount of the manufactured interest shall be treated—

(a) in relation to the interest manufacturer, for all the purposes of the Tax Acts except the determination of whether a deduction of tax is liable to be made on the making of the manufactured payment, and

(b) in relation to the recipient and all persons claiming title through or under him, for all the purposes of those Acts,

as if it were the gross amount of a periodical payment of interest on those gilt-edged securities, but made by the interest manufacturer.

(3) Sub-paragraph (4) of paragraph 3 above shall apply for the purposes of this paragraph as it applies for the purposes of that paragraph.

(4) In this paragraph “gilt-edged securities” has the same meaning as in section 51A.”

(3) In paragraph 5(6) of that Schedule (construction of references to securities in provisions relating to interest passing through the market), after “United Kingdom securities” there shall be inserted “, other than gilt-edged securities (within the meaning of section 51A),”.

(4) This section shall have effect in relation to any payments made on or after such day as the Treasury may by order appoint, and different days may be appointed under this subsection for different purposes.