Income Tax Act 2007 section 869

Sale and repurchase of securities

Section 869 ensures that certain investments connected with sale and repurchase ("repo") transactions involving building societies are not treated as relevant investments subject to the duty to deduct income tax at source.

• Where a building society borrows money under a repo arrangement, the resulting debt is not treated as a relevant investment, so no tax deduction at source is required on interest paid.
• Where cash is deposited with a building society as security for performance of a repo agreement, that deposit is also excluded from being a relevant investment.
• These exclusions apply only to building societies — they do not apply to deposit-takers such as banks, because the underlying rules already treat these situations differently for deposit-takers.
• For deposit-takers, interest paid on cash held as security under repo agreements remains subject to the duty to deduct tax when paid to individuals, Scottish partnerships, personal representatives, or trustees of discretionary or accumulation settlements.