The following Tax practice note provides comprehensive and up to date legal information covering:
Unless an exemption or relief applies, payments of:
yearly interest (or amounts that are treated by tax legislation as payments of yearly interest), and
which have a UK source
are subject to UK withholding tax at the basic rate (currently, 20%) (for more detail, see Practice Note: UK withholding tax on yearly interest).
For an overview of UK withholding tax on yearly interest, see: UK withholding tax—overview.
The key UK withholding tax exemptions detailed in this Practice Note include the exemptions for:
interest paid on regulatory capital securities
interest paid by banks in the ordinary course of their business
interest on a bank loan
interest paid to a building society
interest qualifying for the UK to UK exemption
interest on a quoted eurobond
interest on a qualifying private placement
interest paid on peer-to-peer (P2P) lending
interest distributions from certain funds
interest paid to an associated EU company, and
interest under a double tax treaty
References in this Practice Note to gross payments are to payments from which tax has not been, and is not required to be, deducted.
Whether or not a payment is subject to withholding tax may affect the drafting of relevant documentation, such as:
whether or not to offer a gross up, and
exclusions applicable to any such gross up
For more detail on the interaction of UK withholding tax and the drafting of a
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