Tax issues for banking lawyers

Tax resources for banking lawyers

While this overview provides a guide to the Banking & Finance content in relation to taxation issues in banking and finance, the Tax module provides more detailed and extensive materials.

Withholding tax

UK withholding tax

Withholding tax is a method of collecting tax at source from the person who makes the payment (as opposed to collecting it from the recipient of the payment). It is an efficient way for tax authorities such as His Majesty's Revenue and Customs (HMRC) to collect tax as the person making the payment has the administrative burden of:

1. •

   withholding the appropriate amount of income tax from the payment, and

2. •

   accounting for such tax to HMRC

Under UK law, where a payment of yearly interest has a UK source, an amount equal to the basic rate of income tax (currently 20%) must be withheld from the payment and paid to HMRC, unless an exemption applies.

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