Income Tax Act 2007 section 877

UK public revenue dividends

Section 877 provides an exception from the normal duty to deduct income tax at source for interest payments that qualify as UK public revenue dividends.

• Interest payments classified as UK public revenue dividends are exempt from the standard duty to deduct income tax at source under section 874.
• A UK public revenue dividend is a specific type of interest payment defined in section 891 of the Income Tax Act 2007, typically relating to government securities.
• Although these payments are exempt from withholding under the general yearly interest rules, a separate duty to deduct may still apply under Chapter 5 of Part 15 of the Act, which deals specifically with public revenue dividend deductions.
• The effect is to carve out government-related interest from the general withholding regime and subject it instead to its own dedicated deduction rules.