26Amendments as to special classes of business
(1)The following provisions shall cease to have effect, namely,—
(a)the proviso to sub-paragraph (1) of paragraph 7 of the Fourth Schedule to the Finance Act, 1937 (as set out in section thirty-two of the Finance Act, 1947), and subsection (2) of section twenty-nine of the Finance Act, 1951 (which provide that income received from certain statutory undertakers by way of distribution of profits is not to be included in computing profits of a body corporate having a controlling interest in the undertakers, but is to be included in other cases);
(b)subsection (3) of section forty of the Finance Act, 1947, and section forty of the Finance Act, 1957 (which make special provision as respects certain payments by nationalised undertakings);
(c)section forty-two of the Finance Act, 1947 (which limits the profits tax chargeable in the case of a building society to two per cent. of the profits computed without deduction for interest on money borrowed from members or depositors).
(2)In the case of—
(a)a society registered under the Industrial and Provident Societies Acts, 1893 to 1954, or under the Industrial and Provident Societies Acts (Northern Ireland), 1893 to 1955 ; or
(b)a society regulated by any of the Acts regulating building societies (including Acts of the Parliament of Northern Ireland);
dividends, bonuses and similar distributions to members on their shares in the society shall, in computing for the purposes of the profits tax the profits or losses either of the society or of the recipient, be treated in the same way as interest on moneys borrowed by the society.
(3)Where for any year of assessment a building society enters into arrangements under section four hundred and forty-five of the Income Tax Act, 1952, and by reason thereof income tax is not deducted from dividends or interest of any description, then for the purposes of the profits tax—
(a)in computing profits or losses of the society for any accounting period ending in that year, the deduction to be made for any dividends or interest from which income tax is not deductible by reason of arrangements under the said section shall include an amount computed by reference to the last mentioned dividends and interest in accordance with the provision made by the arrangements with reference to dividends and interest for charging the society to income tax for the said year; and
(b)the amount to be included in the recipient's profits in respect of any dividend or interest from which tax is not deducted as aforesaid shall be the same as if the amount actually paid or credited were the part remaining after deduction of income tax at the standard rate in force for the said year.
(4)This section shall have effect as respects any chargeable accounting period ending after the beginning of April, nineteen hundred and fifty-eight.