The following Corporation Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
Where acorporate borrower other than afinancial institution pays interest with aUK source to an overseas lender, then the general rule is that income tax must be withheld at 20%. This is subject to asignificant number of exceptions such as the one related to interest on quoted Eurobonds in ITA 2007, s 882. For additional information, see the Withholding tax on payments of interest guidance note. For general details on withholding tax (WHT) on interest, royalties and rental income, see the Withholding tax guidance note.
Where adouble taxation treaty exists between the jurisdictions of the borrower and the lender then WHT may be reduced partially or wholly on the making of aformal claim. For payments made before 1 January 2021, European directives also reduced intra-EEA WHT rates to zero in many circumstances. For example, the EU Interest and Royalties directive may have been applicable to interest payments on aloan where an EEA company beneficially owns at least 25% of aUK company, or vice versa. Relief was not automatic and an application to HMRC by the overseas recipient was required in order to receive gross interest from aUK company.
Prior to the introduction of the double taxation treaty passport (DTTP) scheme, atime-consuming and onerous process was required for each and every loan issued. The overseas lender had to prove its tax residence status with its home country fiscal authority and submit this proof to HMRC along with the loan documentation. In the interim, while clearance was awaited, the UK borrower may be required to deduct income tax at source leaving the lender in aless than satisfactory position. However, many standardised loan agreements also provided for ‘gross-up’ clauses requiring the borrower to make good any tax deductions which would impact the lender’s return. This would put the borrower at aparticular disadvantage from acash flow perspective. The problem was particularly severe when dealing with loans
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
Maintenance payments are payments made by a taxpayer to their former or separated spouse for the maintenance of that former spouse or their children. To obtain any tax relief for maintenance payments, one of the couple must have been born before 5 April 1935 and the payments must be made by virtue
This guidance note provides details of quarterly instalment payments (QIPs) for corporation tax purposes and which companies need to pay their tax liabilities in this manner.Generally, corporation tax is payable nine months and one day after the end of the relevant accounting period. However, large
Many people work from home either on an informal or a full-time basis. These people can be employed or self-employed, and their employment status affects the expenses they can claim as a deduction from their earnings.When dealing with someone working from home, it is important to remind him that
Class 1 and Class 1AClass 1 and Class 1A are the categories of NIC that can be charged on expenses reimbursed and benefits provided to employees. These classes are mutually exclusive. A benefit cannot be subject to both Class 1 and Class 1A NIC. Three requirements must be met before Class 1A NIC is
To view our latest tax guidance content, sign in to Tolley Guidance or register for a free trial.