Income Tax Act 2007 section 889

Payments in respect of building society securities

Section 889 sets out the duty to deduct income tax at source from dividend and interest payments on certain building society securities that are listed, or capable of being listed, on a recognised stock exchange.

• The section applies to dividends or interest paid on building society securities that are listed (or capable of being listed) on a recognised stock exchange at the time the payment becomes due.
• Certain instruments are excluded: qualifying certificates of deposit, qualifying uncertificated eligible debt security units, and quoted Eurobonds are not subject to this deduction requirement.
• The person making or facilitating the payment must deduct income tax at the basic rate for the relevant tax year before paying the dividend or interest to the recipient.
• "Dividend" is broadly defined to include any distribution by the building society, and "security" includes shares — in particular, permanent interest bearing shares (PIBS).