ANNEX 1:: MINOR CHANGES IN THE LAW MADE BY THE BILL This change has no implications for the amount of tax paid, who pays it or when. It affects (in principle and in practice) only administrative matters.
Change 129: Deduction of tax: deposit-takers and building societies: investments to be treated as being or as not being relevant investments: section 857
This change is about the administrative effect of Changes 126 (enactment of regulations) and 127 (definition of relevant investment) on how deposit-takers and building societies decide whether or not to treat investments as relevant investments.
As part of the alignment of the building society regime and deposit-takers regime, it is necessary to have one common basis for determining when an investment should be treated as being a relevant investment. This involves changes to the rules regarding the way that building societies check whether a particular payment should be made gross.
For example, regulations 11(1), (2), (2A) and (4) of the Income Tax (Building Societies) (Dividends and Interest) Regulations 1990 (SI 1990/2231) (the building society regulations) state that a building society cannot treat a payment as being within one of the gross payment categories found in regulation 4(1)(a) to (g), (k) or (r) unless it has a declaration to that effect. But once it has that declaration, it can continue to treat such payments as gross until it has information that regulation 4(1) of the building society regulations may not apply.
For deposit-takers, declarations are only required for persons falling in the equivalent of regulations 4(1)(a) to (c). As deposit-takers do not have to obtain declarations in respect of regulation 4(1)(d) to (g), (k) or (r), once the two regimes are aligned, building societies will no longer have to obtain declarations for payments previously caught under regulations 4(1)(d) to (g), (k) and (r). Building societies will have to check only that the payment is not caught in one of the four categories and, if it is not, no further checks or declarations will be required.