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HMRC internal manual

Savings and Investment Manual

Savings and investment income: what is savings and investment income?

The Income Tax (Trading and Other Income) Act 2005

The savings and investment income of individuals and other persons charged to income tax is taxable, for the most part, under Part 4 of the Income Tax (Trading and Other Income) Act 2005. Prior to this, the main charge on interest and similar types of income was under Case III of Schedule D (Income and Corporation Taxes Act 1988/S18).

Part 4 of ITTOIA05 (ITTOIA05/S365 to S573) contains the tax rules for the following types of Savings and Investment Income described in SAIM.

  • Interest (including the disposal of the right to interest) - Chapters 2 and 11 of Part 4 (SAIM2000)
  • Dividends and other distributions from UK companies (including stock dividends and amounts written off loans from close companies), and foreign dividends - Chapters 3 to 6 and 13 of Part 4 (SAIM5000)
  • Profits from deeply discounted securities - Chapter 8 of Part 4 (SAIM3000)
  • Artificial transactions in futures and options - Chapter 12 of Part 4 (SAIM7000)

Other statutory rules

Although Part 4 of ITTOIA05 covers most of the types of income dealt with in SAIM, some topics are taxed under other parts of ITTOIA05 or under the Income Tax Act 2007 (ITA07).

  • The Accrued Income Scheme - Part 12 of ITA07 (SAIM4000).
  • Income from unit trusts and other forms of collective investment scheme - Chapter 9 of Part 9 ITA07 (and Chapter 10 of Part 4 of ITTOIA05) (SAIM6000).
  • Annual payments - Chapter 7 of Part 5 of ITTOIA05 (SAIM8000).
  • Deduction of tax from savings and investment income and annual payments - Part 15 of ITA07 (SAIM9000). These rules also apply to corporate taxpayers (SAIM1010).
  • Relief for interest payments - Chapter 1 of Part 8 of ITA07 (SAIM10000)