17 April 2012
Rule mooted to determine interest component in compensations
A consultation document has been published on proposals for changes to the income tax rules on the taxation of interest and interest-like returns, and the rules on the deduction of tax at source from such amounts.
In particular, the following measures are proposed:
- A new rule in to determine the interest component in compensation payments.
- New rules to provide for deduction of tax at source from the interest component in compensation payments.
- In relation to the rules on deduction of income tax, the abolition of the concept of ‘yearly interest’, and a change to the meaning of the term ‘yearly interest arising in the UK’.
- A change to the exemption from the requirement to deduct tax from quoted eurobonds for certain intra-group transactions.
- A new rule to put the tax treatment of ‘interest in kind’ beyond doubt.
- A new ‘disguised interest’ rule to address income tax avoidance in relation to interest.
Comments should be sent by email no later than 22 June.
