The following Tax guidance note Produced in partnership with Sarah Squires of Old Square Tax Chambers provides comprehensive and up to date legal information covering:
Unless an exemption or relief applies, payments of yearly interest that have a UK source are subject to UK withholding tax at the basic rate (currently, 20%). For more details, see Practice Note: UK withholding tax on yearly interest.
This Practice Note outlines the exemption from UK withholding tax that:
is contained in section 888A of the Income Tax Act 2007 (ITA 2007) and the Qualifying Private Placement Regulations 2015, SI 2015/2002 (QPP Regs)
took effect on 1 January 2016, and
applies to interest paid:
by a corporate borrower in respect of an unlisted security or loan that qualifies as a qualifying private placement (QPP)—see: What is a qualifying private placement? below
to a lender that is resident in a qualifying territory, ie in the UK or in certain tax treaty jurisdictions—see: Conditions relating to the creditor below
It also explains the circumstances in which the QPP exemption may cease to apply to a payment of interest—see: Withdrawing creditor certificates and Cancelling creditor certificates below.
For more information on private placements, see Practice Notes: Private placements and Key features in LMA PEPP documentation.
For more information on other exemptions and reliefs from UK withholding tax, see Practice Note: Exemptions and reliefs from UK withholding tax on yearly interest.
References in this Practice Note to gross payments are to payments from which tax has not been, and
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