5.11.1 Withholding tax – overview

Relief for interest is available regardless of where the lender is located. However, care needs to be taken when dealing with overseas lenders to ensure that there is no obligation on the individual to withhold tax at basic rate from the interest payments he makes to the lender and to account for this to HMRC.

The rule in this respect is that if yearly interest from a UK source is paid to a non-resident, then the payer must deduct UK tax at basic rate from this interest and account for this to HMRC.

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