Qualifying private placement exemption from withholding tax
Produced in partnership with Sarah Squires of Old Square Tax Chambers
Qualifying private placement exemption from withholding tax

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:

  • Qualifying private placement exemption from withholding tax
  • HMRC guidance
  • What is a qualifying private placement?
  • QPP exemption not confined to private placements
  • What is a security?
  • The debtor condition
  • The listing condition
  • Other conditions specified in regulations
  • Conditions relating to the security
  • Conditions relating to the debtor
  • more

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:

  1. 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)

  2. took effect on 1 January 2016, and

  3. applies to interest paid:

    1. 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

    2. 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