§ Mr. Lomasasked the Chancellor of the Exchequer under what circumstances interest obtained from investment in a building society is subject to taxation.
§ Mr. NottInterest from investment in a building society is, like other forms of income, liable to tax. The investor, however, does not himself have to pay any basic rate tax; instead the society accounts for the tax direct to the Inland Revenue at, for the most part, a special composite rate calculated to yield as nearly as possible the same amount as if tax had been deducted from the interest at the basic rate and those investors not liable to tax had claimed refunds. Investors liable at the higher rates of tax are required to pay tax at those rates on the gross equivalent of the interest they receive, but are given credit for the corresponding basic rate tax.