Income Tax Act 2007 section 887

Payments made by registered societies

Section 887 exempts registered societies from the obligation to deduct income tax at source on certain payments made to UK-resident recipients, and imposes a reporting requirement on those societies in respect of such payments.

• Registered societies do not need to deduct income tax from interest on mortgages, loans, loan stock or deposits, or from interest, dividends, bonuses or other sums paid to shareholders by reference to their shareholding, provided the recipient's usual place of abode is in the United Kingdom.
• Within three months of the end of each accounting period, the society must submit a return to HMRC listing the name and address of every person who received gross payments totalling £15 or more, together with the amounts paid.
• Failure to submit the required return can result in adverse consequences under section 500(2) of CTA 2009, which may affect the tax treatment of the society's interest payments.
• "Registered society" covers co-operative and community benefit societies, Northern Ireland industrial and provident societies, Northern Ireland credit unions, and European Cooperative Societies (SCEs), and crediting interest counts as paying it for these purposes.