Section 38 Certain State-guaranteed securities

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(1) This section applies to any securities which are issued by a body corporate and in respect of which the payment of interest and the repayment of principal are guaranteed by a Minister of the Government under statutory authority; but does not apply to securities-

(a) specified in the Table to section 37, or

(b) issued by a company formed by the National Development Finance Agency in accordance with section 5 of the National Development Finance Agency Act 2002.

Amendments

Subs (1) substituted by Finance Act 2003 section 43(1)(a)(v) as on and from 6 February 2003.

(2) Any securities to which this section applies shall be deemed to be securities issued under the authority of the Minister for Finance under section 36, and that section shall apply accordingly.

Is tax deductible from interest paid on State-guaranteed securities?

(1)-(2) In general, you are entitled to be paid interest on State-guaranteed securities owned by you gross, i.e., without deduction of tax, but this rule does not apply to:...

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(3) Notwithstanding anything in the Tax Acts, in computing for the purposes of assessment under Case I of Schedule D the amount of the profits or gains of a body corporate by which the securities to which this section applies are issued, for any period for which accounts are made up, the amount of the interest on such securities which, by direction of the Minister for Finance under section 36, as applied by this section, is paid by the body corporate without deduction of tax for such period shall be allowed as a deduction.

Can a company issuing State-guaranteed securities take a deduction for interest paid on securities it issued?

(3) Yes. The company issuing the securities may deduct the interest paid in computing its corporation tax.