Proposals to clarify tax on interest

A consultation document has been published on proposals for changes to the income tax rules on the taxation of interest and interest-like returns, and the rules on the deduction of tax at source from such amounts.

In particular, the following measures are proposed:

• A new rule in to determine the interest component in compensation payments.
• New rules to provide for deduction of tax at source from the interest component in compensation payments.
• In relation to the rules on deduction of income tax, the abolition of the concept of ‘yearly interest’, and a change to the meaning of the term ‘yearly interest arising in the UK’.
• A change to the exemption from the requirement to deduct tax from quoted eurobonds for certain intra-group transactions.
• A new rule to put the tax treatment of ‘interest in kind’ beyond doubt.
• A new ‘disguised interest’ rule to address income tax avoidance in relation to interest.

Comments should be sent by email no later than 22 June.

Issue: 4349 / Categories: News , Income Tax