Introduction Details of the Section
2.Subsection (2) includes new section 380A Income Tax (Trading and Other Income) Act 2005 (ITTOIA) on the list of payments treated as interest in section 369 of that act.
3.New section 380A introduces provisions to ensure payments representing interest made under the FSCS are treated as if they were interest chargeable to income tax.
4.New section 380A(1) provides that any payment made under the FSCS representing interest is treated as interest in the hands of the recipient.
5.New subsection (3) provides for the amount treated as interest to include any amount equivalent to income tax deducted from the payment representing interest under the FSCS.
6.New section 979A of the Income Tax Act 2007 (ITA) ensures that where the FSCS has calculated compensation as if a sum of tax had been deducted then the recipient can bring that sum into account when calculating their tax liability.
7.New section 979A(1) provides that the new section applies if a payment is made under the FSCS which has been calculated as if the payment were interest from which tax would have been deducted.
8.New subsection (2) ensures that the recipient is treated as if they had been paid the relevant gross amount from which a sum representing income tax had been deducted at source.
9.New subsection (3) allows the sum treated as income tax to be repaid to the recipient or set off against their income tax liability.
10.New subsection (4) defines the “relevant gross amount” as the total of the sum representing income tax deducted by the FSCS and the payment representing interest.
11.New subsection (5) provides an obligation on the scheme manager of the FSCS to supply certain information to the recipient if requested to do so in writing. And new subsection (6) provides that the recipient can enforce such a request.
12.Subsection (5) of the section provides that the section applies to payments made by the FSCS on or after 6 October 2008.