E1.405 Meaning of interest
The charge under ITTOIA 2005 is simply a charge on 'interest'1.
In Schulze2, the Lord President considered that 'interest of money … is just recompense to the creditor for being deprived of the use of his money'.
In Bennett 3, Rowlatt J called it 'payment by time for the use of money'.
In Westminster Bank Ltd4, Lord Wright said 'the essence of interest is that it is a payment which becomes due because the creditor has not had his money at the due date. It may be regarded as either the profit he might have made if he had had the use of the money or conversely the loss he suffered because he had not had that use. The general idea is that he is entitled to compensation for the deprivation.'
For the purposes of this charge, the following receipts are treated as interest5:
• building society dividends (see E1.406)
• interest distributions of authorised unit trusts (see E1.406A)