Income Tax (Trading and Other Income) Act 2005

Charge to tax on interest U.K.

369 Charge to tax on interest U.K.

(1) Income tax is charged on interest.

(2) The following sections extend what is treated as interest for certain purposes—

• section 372 (building society dividends),

• section 373 (open-ended investment company interest distributions),

• section 376 (authorised unit trust interest distributions),

• [F1 section 378A (offshore fund distributions),]

• section 379 ( [F2 payments by registered societies or certain co-operatives] ),

• section 380 (funding bonds),

• [F3 section 380A (FSCS payments representing interest),] and

• section 381 (discounts).

(3) For exemptions, see in particular—

(a) Chapter 2 of Part 6 (national savings income),

(b) Chapter 3 of Part 6 (income from individual investment plans),

(c) Chapter 4 of Part 6 (SAYE interest),

(d) Chapter 6 of Part 6 (income from FOTRA securities),

(e) sections 749 to [F4 756A]( [F5 repayment interest,] interest arising from repayment supplements, F6 ... damages for personal injury, employees' share schemes, repayments of student loans, [F7 unpaid relevant contributions, ] the redemption of funding bonds [F8 , certain foreign currency securities and interest on certain deposits of victims of National-Socialist persecution)] F9 ...

F9 (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) Subsection (1) is also subject to [F10 Chapter 3 of Part 12 of ITA 2007 (exemption for interest on securities to which Chapter 2 of that Part applies)] .

[F11 (5) See also Chapter 3A of Part 14 of ITA 2007 (which provides for the receipts of certain types of company being wound up to be charged to income tax under that Chapter instead of under any other provision that would otherwise apply).]

Textual Amendments

F1 Words in s. 369(2) inserted (with effect in accordance with s. 39(5) of the amending Act) by Finance Act 2009 (c. 10), s. 39(2)

F2 Words in s. 369(2) substituted (1.8.2014) by Co-operative and Community Benefit Societies Act 2014 (c. 14), s. 154, Sch. 4 para. 93 (with Sch. 5)

F3 Words in s. 369(2) inserted (with effect in accordance with s. 33(5) of the amending Act) by Finance Act 2009 (c. 10), s. 33(2)

F4 Word in s. 369(3)(e) substituted (19.7.2006) by Finance Act 2006 (c. 25), s. 64(1)(a)

F5 Words in s. 369(3)(e) inserted (with effect in accordance with art. 1(2) of the amending S.I.) by The Finance Act 2009, Sections 101 and 102 (Interest on Late Payments and Repayments), Appointed Days and Consequential Provisions Order 2014 (S.I. 2014/992), arts. 1(1), 8(2)

F6 Words in s. 369(3)(e) omitted (with effect in accordance with Sch. 39 para. 53(3) of the amending Act) by virtue of Finance Act 2012 (c. 14), Sch. 39 para. 53(2)

F7 Words in s. 369(3)(e) inserted (19.7.2011) by Finance Act 2011 (c. 11), s. 69(2)

F8 Words in s. 369(3)(e) substituted (19.7.2006) by Finance Act 2006 (c. 25), s. 64(1)(b)

F9 S. 369(3)(f) and word omitted (with effect in accordance with s. 34(8) of the amending Act) by virtue of Finance Act 2021 (c. 26), s. 34(4)(a)

F10 Words in s. 369(4) substituted (6.4.2007 with effect as stated in s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), ss. 1027, 1034, Sch. 1 para. 513 (with transitional provisions and savings in Sch. 2)

F11 S. 369(5) inserted (1.4.2010) (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 7 para. 67 (with Sch. 9 paras. 1-9, 22)

370 Income charged U.K.

(1) Tax is charged under this Chapter on the full amount of the interest arising in the tax year.

(2) Subsection (1) is subject to Part 8 (foreign income: special rules).

[F12 370A Valuation of interest not paid in cash U.K.

(1) This section applies to the payment of an amount of interest in the form of—

(a) goods or services, or

(b) a voucher.

(2) Where this section applies by virtue of subsection (1)(a), the amount of the payment is to be taken to be equal to the market value, at the time the payment is made, of the goods or services.

(3) Where this section applies by virtue of subsection (1)(b), the amount of the payment is to be taken to be equal to whichever is the higher of—

(a) the face value of the voucher,

(b) the amount of money for which the voucher is capable of being exchanged, or

(c) the market value, at the time the payment is made, of any goods or services for which the voucher is capable of being exchanged.

(4) In this section references to a voucher are to a voucher, stamp or similar document or token which is capable of being exchanged for money, goods or services.]

Textual Amendments

F12 S. 370A inserted (with effect in accordance with Sch. 11 para. 12(2) of the amending Act) by Finance Act 2013 (c. 29), Sch. 11 para. 6

371 Person liable U.K.

The person liable for any tax charged under this Chapter is the person receiving or entitled to the interest.