UK withholding tax on yearly interest
UK withholding tax on yearly interest

The following Tax practice note provides comprehensive and up to date legal information covering:

  • UK withholding tax on yearly interest
  • Yearly interest
  • Examples of what constitutes yearly interest
  • Examples of what does not constitute yearly interest
  • Statutory interest payable in an administration can be yearly interest
  • Guarantee payments
  • Alternative finance returns
  • UK source
  • Practical implications for a corporate borrower
  • Exemptions and reliefs

UK withholding tax on yearly interest

Unless an exemption or a relief applies, a payment of UK source yearly interest is subject to UK withholding tax at the basic rate (currently, 20%) if made by:

  1. a company (unless it is made by that company in a fiduciary or representative capacity)

  2. a local authority (unless it is made by that local authority in a fiduciary or representative capacity)

  3. by or on behalf of a partnership of which at least one partner is a company, or

  4. any person to another person whose usual place of abode is outside the UK (broadly, this applies where the recipient is an individual who usually lives outside the UK or a company whose main place of business is outside the UK)

The requirement to deduct an amount in respect of income tax at the basic rate from a payment of yearly interest falls on the ‘person by or through whom the payments is made’. For more information on that, see Practice Note: Administration of UK withholding tax on yearly interest and other types of income—Whose obligation?

For exemptions and reliefs from the obligation to deduct income tax from yearly interest, see Practice Note: Exemptions and reliefs from UK withholding tax on yearly interest.

For an overview of UK withholding tax on yearly interest, see: UK withholding tax—overview.

This Practice Note explains the concepts of yearly

Related documents:

Popular documents