The Income Tax (Building Societies) (Dividends and Interest) (Amendment No. 2) Regulations 1992

Explanatory Note

(This note is not part of the Regulations)

These Regulations, which are made under section 477A(1) and (2) of the Income and Corporation Taxes Act 1988 and come into force on 14th December 1992, amend the Income Tax (Building Societies) (Dividends and Interest) Regulations 1990 (S.I. 1990/2231) (“the Building Societies Regulations”), previously amended by S.I. 1992/11. The amendments further extend the categories of payments which may be made without deduction of tax by building societies (“gross payments”) and provide that the amendments made by section 29 of the Finance (No. 2) Act 1992 to section 17 of the Taxes Management Act 1970 (returns of interest paid by banks) apply to returns of dividends and interest paid by building societies.

Regulation 1 provides for citation and commencement and regulation 2 contains definitions.

The remainder of the Regulations make amendments to the Building Societies Regulations.

Regulation 3 amends the definition of “qualifying certificate of deposit” in regulation 2 of the Building Societies Regulations and inserts a new definition in that regulation (“qualifying deposit right”). It also repeals the definition of “exempt friendly society” which, in consequence of the extension (by regulation 4) of the categories of gross payments to payments to all companies (bodies corporate and unincorporated associations), is no longer needed.

Regulation 4 extends the categories of gross payments to payments to companies, health service bodies and unit trust schemes, and payments in respect of qualifying deposit rights. It repeals in consequence provisions relating to gross payments to certain companies, which are no longer needed, and contains a saving in respect of payments to subsidiary companies resident in the United Kingdom.

Regulation 5 is concerned with the requirement that, in certain cases, a building society has to receive a declaration from an investor before it may make gross payments. This requirement is extended to payments to the trustees of unit trust schemes and, with certain exceptions, payments to companies.

Regulation 6 provides that the amendments made by section 29 of the Finance (No. 2) Act 1992 to section 17 of the Taxes Management Act 1970 in connection with declarations that persons beneficially entitled to payments of interest by banks are not ordinarily resident in the United Kingdom extend to similar declarations made in respect of persons beneficially entitled to payments of dividends and interest by building societies.