The Investment Trusts (Dividends) (Optional Treatment as Interest Distributions) Regulations 2009

Treatment of dividends as interest distributions

5.—(1) If this regulation applies, the company may designate as an interest distribution all or part of the amount distributed as a dividend or dividends in respect of the period of account which includes the accounting period.

(2) A dividend, or part of a dividend, in respect of which a designation under this regulation has been made is referred to in these Regulations as an “interest distribution”.

(3) A designation under paragraph (1) becomes irrevocable at the time the interest distribution is made.

(4) The aggregate of the amounts distributed as interest distributions in relation to an accounting period may not exceed the amount of the company’s qualifying interest income for the accounting period.

Regulation 8 explains how a company’s qualifying interest income for an accounting period is calculated.

(5) For the purposes of paragraph (4), where an interest distribution is made in respect of a period of account which includes more than one accounting period the amount distributed as the interest distributions in relation to each accounting period is—

where—

“A” is the amount of qualifying interest income for the accounting period;

“I” is the total of the amounts distributed as interest distributions in respect of the period of account; and

“T” is the total amount of the qualifying interest income in respect of all the accounting periods in the period of account.