Section 261 Taxation of relevant interest, etc
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Notwithstanding anything in the Tax Acts-
(a) no part of any interest paid by a building society in respect of any shares in the society shall be treated for the purposes of the Corporation Tax Acts as a distribution of the society or as franked investment income of any company resident in the State;
(b) except where otherwise provided for in section 267, no repayment of appropriate tax in respect of any relevant interest shall be made to any person receiving or entitled to the payment of the relevant interest who is not a company within the charge to corporation tax in respect of the payment;
(c)[(i) the amount of any payment of relevant interest shall be regarded as income chargeable to tax under Case IV of Schedule D, and under no other Case or Schedule, and shall be taken into account in computing the total income of the person entitled to that amount, but, in relation to such a person (being an individual)-
(I) except for the purposes of a claim to repayment under section 267(3), the specified amount within the meaning of [section 188]1 shall, as respects the year of assessment for which he or she is to be charged to income tax in respect of the relevant interest, be increased by the amount of that payment,
[(II) where the taxable income of that person includes relevant interest which comes within paragraph (b) of the definition of "appropriate tax" in section 256(1) ...2, the part of taxable income, equal to that relevant interest, shall be chargeable to tax at the rate at which tax was deducted from that relevant interest.]3
(III) as respects any part of relevant interest which comes within paragraph (c) of the definition of "appropriate tax" in section 256(1), the person shall be chargeable to tax at the rate of tax at which tax was deducted from the relevant interest,
and]4
(ii) where the specified amount is so increased, references in [section 188]5 to-
(I) income tax payable shall be construed as references to the income tax payable after credit is given by virtue of section 59 for appropriate tax deducted from the payment of relevant interest, and
(II) a sum equal to twice the specified amount shall be construed as references to a sum equal to the aggregate of-
(A) twice the specified amount (before it is so increased), and
(B) the amount of the payment of relevant interest;
(d) section 59 shall apply as if a reference to appropriate tax deductible by virtue of this Chapter were contained in paragraph (a) of that section.
Amendments
1 Substituted by Finance Act 2008 section 5(d)(i) for 2008 and later tax years.
2 Deleted by Finance Act 2010 section 159 and Schedule 4 para 1(b) from 3 April 2010. This corrects a legislative error.
3 Para (c)(i)(II) substituted by Finance (No. 2) Act 2008 section 26(1)(b) for 2009 and later tax years.
4 Para (c)(i) substituted by Finance Act 2000 section 28(2).
5 Substituted by Finance Act 2008 section 5(d)(ii) (as amended by Finance (No. 2) Act 2008 section 99 and Schedule 6 para 6(a)(i)) for 2008 and later tax years.
