Income Tax Act 2007 section 888D

Interest distribution of certain authorised unit trusts

Section 888D provides an exemption from the obligation to deduct income tax at source from interest distributions made by certain authorised unit trusts.

• Certain authorised unit trusts are exempt from the normal duty to deduct income tax at source from payments of yearly interest.
• The exemption applies specifically to interest distributions treated as yearly interest under section 376 of ITTOIA 2005.
• Under section 376, a yearly interest payment is treated as made where the distributable amount is shown in the trust's accounts as yearly interest.
• This removes an administrative burden from authorised unit trusts that would otherwise need to withhold tax on these deemed interest payments.