Income Tax (Building Societies) Regulations 1986
| Jurisdiction | UK Non-devolved |
| Citation | SI 1986/482 |
| Year | 1986 |
1986No. 482
INCOME TAX
The Income Tax (Building Societies) Regulations 1986
13thMarch1986
14thMarch1986
6thApril1986
The Commissioners of Inland Revenue, in exercise of the powers conferred on them by section 343 (1A) of the Income and Corporation Taxes Act 1970( a), hereby make the following regulations:--
Citation and commencement
1. These Regulations may be cited as the Income Tax (Building Societies) Regulations 1986 and shall come into operation on 6th April 1986.
Interpretation
2.--(1) In these Regulations unless the context otherwise requires:--
"the Taxes Act" means the Income and Corporation Taxes Act 1970;
"basic rate amount" is the amount to which Regulation 5 applies;
"discretionary and accumulation trust" means a trust the income arising to the trustees of which is chargeable to income tax at the additional rate;
"dividend" means any distribution in respect of investments including any qualifying distribution as defined for the purposes of the Corporation Tax Acts and whether described as a dividend or otherwise;
"exempt friendly society" means a registered friendly society exempt from income tax and corporation tax under the provisions of section 332 of the Taxes Act;
"exempt pension fund" means an exempt pension fund within the meaning given to it by section 6(2) of the Finance Act 1975( b);
"gross payment" means any payment to which Regulation 6 applies;
"investment" includes any shareholding, deposit or loan and "investor" shall be construed accordingly;
"payment" (except in relation to a payment to the Board) includes "credit" and "paid" shall be construed accordingly;
"payment quarter" means a period of three months ending with the last day of February, May, August or November;
"qualifying certificate of deposit" means a certificate of deposit as defined in section 55(3) of the Finance Act 1968( c), which is issued by a
(a) 1970 c.10; subsection (1A) was inserted in section 343 by subsection (3) of section 40 of the Finance Act 1985 (c.54). Other relevant amendments to section 343 were made by that section, by section 38 of, and paragraph 40 of Schedule 6 and Part II of Schedule 14 to, the Finance Act 1971 (c.68), by paragraph 22 of Schedule 24 to the Finance Act 1972 (c.41), and by section 26(5) of, and Part V of Schedule 23 to, the Finance Act 1984 (c.43).
(b) 1975 c. 7.
(c) 1968 c. 44.
building society and under which--(a) the amount payable by the society, exclusive of interest, is not less than £50,000, and
(b) the obligation of the society to pay that amount arises before the expiry of the period of twelve months beginning on the date of issue of the certificate;
"qualifying time deposit" means a deposit which is made with the society concerned by way of loan and which--
(a) is in sterling and for an amount which is not less than £50,000,
(b) is made on terms requiring repayment of the loan at the end of a specified period which expires before the end of the period of twelve months beginning on the date on which the deposit is made, and
(c) is not made on terms which make provision for the transfer of the right to repayment;
"reduced rate amount" is the amount to which Regulation 4 applies;
"section 343" means section 343 of the Taxes Act.
(2) For the purposes of and subject to these Regulations--
(a) section 53 of the Taxes Act shall apply to a payment by a building society of an annuity or annual payment within the meaning of section 53(1)(a), and
(b) section 54 of the Taxes Act shall apply to a payment of interest on any quoted Eurobond in any case where its application is not excluded by virtue of section 35(1) of the Finance Act 1984( a),
and those payments are referred to in these Regulations respectively as a "section 53 payment" and a "section 54 payment"( b).
Reduced rate amount and basic rate amount payments
3. Except in respect of gross payments which it makes a building society shall pay to the Board on the relevant payment date for each payment quarter or other period to which Regulation 7 applies, in respect of any payments of dividends or interest and any section 53 payments or section 54 payments made after February 1986, a sum made up of the reduced rate amount and the basic rate amount for that payment quarter or period.
4.--(1) The reduced rate amount is the total of the amounts representing income tax calculated by applying the reduced rate to the grossed-up amounts of dividends and interest paid by a building society in respect of investments described in paragraph (2).
(2) The investments to which paragraph (1) refers are investments (which are not marketable securities within the meaning of paragraph (3)) of the following descriptions--
(a) investments owned beneficially by an individual or a Scottish partnership, all the partners in which are individuals, and owned either solely by the individual or partnership or, if jointly, with another individual or other individuals;
(b) investments owned by personal representatives which were investments beneficially owned by the deceased at the time of his death (or investments representing those investments or dividends or interest thereon);
(a) 1984 c.43.
(b) Relevant amendments were made to sections 53 and 54 by sections 36 and 38 of, and Schedules 6 and 14 (Pt. II) to, the Finance Act 1971 (c.68).
(c) investments owned by trustees of a trust (other than a discretionary and accumulation trust) in the income of which no person who is not an individual, or a Scottish partnership, all the partners in which are individuals, has any interest;
(d) investments owned by persons (apart from the Crown, an exempt pension fund or a company but including bodies of persons and trustees) entitled to exemption from income tax under Schedule D.
(3) The expression "marketable securities" in paragraph (2) means securities which are capable--
(a) under the terms on which they are held, of being owned by any person, and
(b) of being sold on a recognised stock exchange within the meaning of section 535 of the Taxes Act.
(4) The grossed-up amounts to which paragraph (1) and Regulation 5 refer are the amounts which, after making the deduction at the reduced rate or the basic rate, as the case may be, would be equal to the amount actually paid.
5. The basic rate amount is the total of--
(a) the amounts representing income tax calculated by applying the basic rate to the grossed-up amounts of dividends and interest paid by a building society in respect of--
(i) investments owned beneficially by a company, and
(ii) other investments apart from those to which this paragraph applies or in respect of which provision is otherwise made by these Regulations;
(b) sums representing the amount of income tax thereon deducted out...
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