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Tax Deduction Scheme for Interest

»Ê¹ÚÌåÓýapp obligation to deduct tax from interest payments by deposit takers was repealed from 6 April 2016. This guidance applies only to periods before 6 April 2016.

»Ê¹ÚÌåÓýapp duty on deposit takers and building societies to deduct tax is set out in Chapter 2 of Part 15 ITA07 (SAIM9150), and in regulations (SI1990/2232 for banks, and SI1990/2231 for building societies). »Ê¹ÚÌåÓýappse arrangements are known as the Tax Deduction Scheme for Interest (TDSI). For tax years 1996-97 to 2007-2008 income tax was deducted at the 20% savings rate. For 2008-09 onwards tax is deducted at the basic rate. »Ê¹ÚÌåÓýapp HMRC website contains guidance for deposit takers on the TDSI scheme.

ITA07/S852 allows for the general duty to deduct tax to be disapplied. »Ê¹ÚÌåÓýapp above regulations also set out the arrangements under which UK resident individuals can certify that they are not liable to income tax so that they may be paid gross. This is done by completing form R85.

»Ê¹ÚÌåÓýappre are web pages on the HMRC website on bank and building society interest, how to reclaim tax under the ‘Taxbackâ€� arrangements, and on form R85. See also SAIM1120.

Non-UK resident individuals, Scottish partnerships, personal representatives and trustees who declare that they are non-resident may receive payments without deduction of tax.