Income Tax Act 2007 section 888B

Designated dividends of investment trusts

Section 888B exempts certain dividends paid by investment trusts from the normal requirement to deduct income tax at source, where those dividends have been designated as interest distributions.

• Investment trusts can designate certain dividends to be treated as payments of yearly interest for tax purposes.
• Where a dividend has been designated in this way, the usual obligation to withhold income tax at source does not apply.
• The exemption covers dividends designated by both existing investment trusts and prospective investment trusts.
• This means such interest distributions are paid gross, without deduction of income tax by the paying investment trust.