Finance Act 1994

Purchase and sale of securities

17 (1) Section 731 of the Taxes Act 1988 (application and interpretation of provisions relating to purchase and sale of securities) shall be amended as follows.

(2) In subsection (9), in the definition of “interest” the words from “and in applying” to the end of paragraph (b) shall be omitted.

(3) The following subsections shall be inserted after subsection (9)—

“(9A) In applying references in the relevant provisions to interest in relation to a qualifying distribution other than a foreign income dividend—

(a) “gross interest” means the qualifying distribution together with the tax credit to which the recipient of the distribution is entitled in respect of it, and

(b) “net interest” means the qualifying distribution exclusive of any such tax credit.

(9B) In applying references in the relevant provisions to interest in relation to a foreign income dividend paid in circumstances where section 246D(1), (3) or (4) applies—

(a) “gross interest” means the amount of the income arrived at under section 246D(1) by reference to the dividend, and

(b) “net interest” means the dividend.

(9C) Where a foreign income dividend is paid in circumstances other than those where section 246D(1), (3) or (4) applies—

(a) in applying section 735(2) in relation to the dividend the words “the gross amount corresponding with” shall be disregarded, and

(b) in applying references in the relevant provisions (including section 735(2)) to interest in relation to the dividend “net interest” means the dividend.

(9D) In this section “foreign income dividend” shall be construed in accordance with Chapter VA of Part VI.”