The Investment Trusts (Dividends) (Optional Treatment as Interest Distributions) Regulations 2009
Section 45 of the Finance Act 2009 confers powers to make provision about the tax treatment of the dividends of investment trusts (or prospective investment trusts). Investment trusts are collective investment vehicles constituted as companies and which pool investments with a view to spreading investment risk for their investors. Companies are investment trusts for tax purposes if approved as such by the Commissioners for Her Majesty’s Revenue and Customs (“the Commissioners”) in accordance with section 842 of the Income and Corporation Taxes Act 1988 (“ICTA”). The investment return to investors in such companies takes the form of dividends. These Regulations enable an investment trust or prospective investment trust (i.e. a company that expects to be approved as an investment trust) to treat its dividends as payments of interest rather than as dividends on shares for tax purposes.