GOV.UK
Investment trusts: interest distributions: gross interest distributions - automatic entitlement
Exceptions to obligation to deduct tax
The obligation to deduct tax on making interest distributions is imposed by ITA07/S874 (2) (regulation 13 SI2009/2034). Where the obligation applies, tax is deducted at the basic rate of income tax from the interest distribution. However, a number of exceptions are provided within chapter 11 Part 15 ITA 2007, in particular section 933 to 937. Broadly the conditions that satisfy an exception are contained in ITA07/S936:
- That the payment is made to, or to the nominee of:
- a local authority or a health service body
- a public office or department of the Crown
- a charity
- a body that is allowed the same exemption from tax as a charity, the whole income of which is applicable to charitable purposes
- a scientific research organisation
- the scheme administrator of a registered pension scheme
- other pension and retirement annuity trust schemes which are listed at ITA07/S936.
- The person to whom the payment is made is, or is the nominee of, the plan manager of a personal equity plan or individual savings account.
- The person to whom the payment is made is a society or institution with whom tax- exempt special savings accounts may be held and the payment is received in respect of investments held for the purposes of such accounts.
- Beneficial entitlement to the income in respect of which the payment made lies with a partnership, each member of which is a person or body mentioned in (1) above (ITA07/S937).