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New TDSI notes for finance houses

11 February 2009
Categories: News
Guidance on how to operate scheme and deduct tax from interest payments

New guidance notes on the tax deduction scheme for interest (TDSI) have been published by HMRC for financial institutions.

The document provides general direction on how to operate the scheme and deduct basic-rate tax from appropriate interest payments.

The information replaces the guidance notes for deposit-takers and the TDSI guidance notes for building societies, issued in November 2003.

In essence, all financial institutions must deduct basic rate tax when they pay interest on relevant investments, but may pay interest on some investments without deduction in certain circumstances, as explained in the notes.

The organisations must account for the tax to HMRC and investors are regarded as having paid it on the interest.

Alternative finance arrangements - e.g. Sharia accounts - pay a return which is not interest, but for the purposes of the scheme this is treated as if it was an interest payment.

Categories: News
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