‘Interest arising’

The tax charge under ITTOIA05/S370 is on the full amount of the interest arising in the tax year. The word ‘arising’ has been the subject of a number of tax cases. It includes received and also credited to a bank account (Parkside Leasing v Smith (1984) 58TC282). It has a wider meaning than this. In Dunmore v McGowan (1978) (52TC307) it was held to include the 'swelling of a person's assets' even where the person had no immediate right to the income. See the examples at SAIM2440.

Who is taxable on interest?

Under ITTOIA05/S371, the person liable to tax on interest is the person receiving or entitled to the income.

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