CheckLists.Tax (beta)
L5. Interest income
INCOME TAX
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Residence
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- Non-resident only taxable on UK source interest
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General rule
- A non-UK resident is chargeable on interest only if it is from a source in the UK (ITTOIA s.368(1)).
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Split year
- Individual who has a split year is not taxable on interest arising in the overseas part of that split year (s.368(2A)).
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UK source interest
- Ardmore
- Hargreaves.
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Legislation:
Cases:
HMRC manuals:
Commentary:
See also:
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- Loan to non-resident company
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General position
- Non-UK resident company paying interest should usually be non-UK source.
Loan secured on UK assets
- If loan is secured on UK assets that may give it a UK source.
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Interest funded out of money generated in the UK
- Funding the interest out of UK source monies may give it a UK source.
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Legislation:
Cases:
HMRC manuals:
Commentary:
See also:
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Source of interest
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Settlements code: attribution of income to settlor
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- Query whether settlor can be taxed on income he/she paid to the trust (e.g. interest on loan by trust)
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- Held settlor can be taxable on income originating from himself in Rogge.
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Legislation:
Cases: Rogge v. HMRC [2012] UKFTT 49 (TC);
HMRC manuals:
Commentary:
See also:
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