SCHEDULES

SCHEDULE 11Deduction of income tax at source etc

Deduction from interest payable on compensation

1

Chapter 3 of Part 15 of ITA 2007 (deduction from certain payments of yearly interest) is amended as follows.

2

In section 874 (duty to deduct from certain payments of yearly interest), after subsection (5) insert—

“(5A)

For the purposes of subsection (1) a payment of interest which is payable to an individual in respect of compensation is to be treated as a payment of yearly interest (irrespective of the period in respect of which the interest is paid).

(5B)

But the Commissioners for Her Majesty's Revenue and Customs may make regulations which provide that subsection (5A) does not apply in the circumstances prescribed in the regulations.”

3

In section 875 (interest paid by building societies), at the end insert “ unless it is treated as a payment of yearly interest by virtue of section 874(5A). ”

4

In section 878 (interest paid by banks), after subsection (1) insert—

“(1A)

But that duty does apply to such a payment if it is treated as a payment of yearly interest by virtue of section 874(5A).”