Section 15 Alternative finance arrangements
86.This section allows a Saving Gateway account to be treated as an “alternative finance arrangement” for the purposes of Chapter 5 of Part 2 of the Finance Act 2005(14). For a deposit arrangement to come within section 49 of Finance Act 2005, the payments made to the depositor must come “out of any profit resulting from the use of the [deposited] money” and must equate in substance to the return on an investment of money at interest (under sections 49(1) (c) and (d)).
87.The maturity payment at the end of the Saving Gateway account, or a death payment following the death of the account holder, could be seen as breaching these conditions. This section provides that a Saving Gateway account that would otherwise be treated, by virtue of section 49 or 49A of Finance Act 2005, as an alternative finance arrangement but for a maturity payment or death payment, should not be disqualified because of such a payment. It will give certainty that regulations made under section 14 will apply to the tax treatment of an investment return paid on such an account as they do to interest. It will also give certainty of treatment in the provider’s own corporation tax returns.
