The trials and tribulations of interest withholding tax

In this article for Tax Journal, Bezhan Salehy, Rebecca Rose and Elvira Colomer Fatjó take a practical look at UK interest withholding tax, highlighting common compliance pitfalls, HMRC’s approach and emerging complexities.

UK domestic law requires payers of UK-sourced yearly interest to deduct income tax at the basic rate of 20% – effectively a withholding tax (WHT) on interest. This is a longstanding requirement and yet the administration of the UK interest WHT system is full of pitfalls for international businesses investing in the UK and their advisers, particularly given the specificity of available exceptions and the interaction of the UK domestic rules with both the UK’s extensive network of double tax treaties (DTTs) and for relevant periods EU law.

Read the article.