Income Tax (Trading and Other Income) Act 2005 section 367

Priority between Chapters within Part 4

Section 367 establishes which set of rules takes precedence when a particular item of savings or investment income could potentially fall under more than one chapter of Part 4 of the Act.

• Profits from deeply discounted securities (Chapter 8) take priority over the general interest rules (Chapter 2), so discounts on such securities are taxed under the special deep discount regime rather than the general interest charge
• Dividends from UK resident companies (Chapter 3) generally take priority over all other chapters in Part 4
• However, building society dividends, offshore fund distributions, and payments by registered societies or certain co-operatives are treated as interest under Chapter 2, even though they might also fall within Chapter 3 or Chapter 4
• Most savings and investment income naturally falls within only one chapter, so these priority rules only apply in a limited number of overlap situations