Income Tax Act 2007 (c. 3)

Part 15 U.K. Deduction of income tax at source

Modifications etc. (not altering text)

C1 Pt. 15 modified (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), ss. 551(4), 1329(1) (with Pts. 1, 2, Sch. 2 para. 78)

Chapter 5 U.K. Deduction from payments of UK public revenue dividends

Introduction U.K.

890 Overview of Chapter U.K.

(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” U.K.

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 U.K.

892 Duty to deduct from certain UK public revenue dividends U.K.

(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.

(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 [F1 basic rate] in force for the tax year in which it is made.

(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.

Textual Amendments

F1 Words in s. 892(2) substituted (21.7.2008 with effect in accordance with Sch. 1 para. 65 of the amending Act) by Finance Act 2008 (c. 9), Sch. 1 para. 28

Payments which are payable gross U.K.

893 Payments of UK public revenue dividends which are payable gross U.K.

(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),

[F2 (aa) securities, so far as they are not gilt-edged securities, issued or treated as issued under—

(i) the National Loans Act 1939, or

(ii) the National Loans Act 1968,] or

(b) securities which are the subject of a Treasury direction under section [F3 894(3)].

Textual Amendments

F2 S. 893(2)(aa) inserted (with effect in accordance with Sch. 6 para. 28 of the amending Act) by Finance Act 2016 (c. 24), Sch. 6 para. 27(2)(a)

F3 Word in s. 893(2)(b) substituted (with effect in accordance with Sch. 6 para. 28 of the amending Act) by Finance Act 2016 (c. 24), Sch. 6 para. 27(2)(b)

894 Treasury directions U.K.

F4 (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4 (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(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 F5 ... (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.

Textual Amendments

F4 S. 894(1)(2) omitted (with effect in accordance with Sch. 6 para. 28 of the amending Act) by virtue of Finance Act 2016 (c. 24), Sch. 6 para. 27(3)(a)

F5 Word in s. 894(5) omitted (with effect in accordance with Sch. 6 para. 28 of the amending Act) by virtue of Finance Act 2016 (c. 24), Sch. 6 para. 27(3)(b)

Deduction at source applications U.K.

895 Deduction at source application U.K.

(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

(c) made in such form as the Registrar may, with the approval of the Treasury, prescribe.

(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 [F6 section 785 of the Companies Act 2006 (provision enabling procedures for evidencing and transferring title),] 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)).

Textual Amendments

F6 Words in s. 895(6) substituted (6.4.2008) by Companies Act 2006 (Consequential Amendments) (Taxes and National Insurance) Order 2008 (S.I. 2008/954), arts. 1(1), 40 (with art. 4)

896 Withdrawal of application U.K.

(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 U.K.

897 Power to make regulations U.K.

(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—

(a) make different provision for different descriptions of UK public revenue dividend and for different circumstances, and

(b) contain incidental, supplemental, consequential and transitional provision and savings.

(3) The Commissioners for Her Majesty's Revenue and Customs must not make any regulations under this section unless a draft of them has been laid before and approved by a resolution of the House of Commons.