Manufactured interestU.K.
919Manufactured interest on UK securities: payments by UK residents etcU.K.
(1)This section applies if a person who pays manufactured interest as mentioned in section 578(1)—
(a)is UK resident, or
(b)pays the manufactured interest in the course of a trade carried on in the United Kingdom through a branch or agency.
[F1(1A)But this section does not apply if—
(a)the manufactured interest is paid by a UK resident company in the course of a trade carried on through a permanent establishment in a territory outside the United Kingdom, and
(b)section 18A of CTA 2009 has effect in relation to the company for the accounting period in which it is paid.]
(2)The payer of the manufactured interest must, on making the payment, deduct from the gross amount of the manufactured interest a sum representing income tax on it at the [F2basic rate] in force for the tax year in which the payment is made.
(3)The “gross amount” of manufactured interest is equal to the gross amount of the interest of which it is representative.
(4)This section is subject (in particular) to—
section 583 (manufactured payments exceeding underlying payments),
section 585 (manufactured payments: power to deal with special cases),
section 921 (cases where interest on underlying securities paid gross), and
Chapter 11 (payments between companies etc: exception from duties to deduct).
(5)For provision about the collection of income tax in respect of a payment from which a sum must be deducted under this section—
(a)see Chapter 15 if the payer of the manufactured interest is a company, and
(b)otherwise see Chapter 16.
Textual Amendments
F1S. 919(1A) inserted (19.7.2011) by Finance Act 2011 (c. 11), Sch. 13 paras. 21, 31
F2Words in s. 919(2) substituted (21.7.2008 with effect in accordance with Sch. 1 para. 65 of the amending Act) by Finance Act 2008 (c. 9), Sch. 1 para. 31
920Foreign payers of manufactured interest: the reverse chargeU.K.
(1)This section applies if a person who pays manufactured interest as mentioned in section 578(1)—
(a)is non-UK resident, and
(b)pays the manufactured interest otherwise than in the course of a trade carried on in the United Kingdom through a branch or agency.
[F3(1A)This section also applies if—
(a)a UK resident company pays manufactured interest in the course of a trade carried on through a permanent establishment in a territory outside the United Kingdom, and
(b)section 18A of CTA 2009 has effect in relation to the company for the accounting period in which it is paid.]
(2)The recipient must account for and pay income tax in respect of the manufactured interest if the recipient—
(a)is UK resident, or
(b)is non-UK resident but receives the manufactured interest for the purposes of a trade carried on by the recipient in the United Kingdom through a branch or agency.
[F4(2A)But this section does not apply if—
(a)the recipient is a UK resident company which receives the manufactured interest for the purposes of a trade carried on by the recipient through a permanent establishment in a territory outside the United Kingdom, and
(b)section 18A of CTA 2009 has effect in relation to the company for the accounting period in which it is received.]
(3)The amount of income tax to be accounted for and paid is equal to the amount of the sum representing income tax which the payer would have been required to deduct under section 919(2) if the payer had been UK resident [F5and section 919(1A) did not apply].
(4)If the payer would not have been required to deduct any sum under section 919(2), the recipient is not required to account for and pay any income tax under this section.
(5)For examples of cases in which subsection (4) applies see (in particular)—
section 921 (cases where interest on underlying securities paid gross), and
Chapter 11 (payments between companies etc: exception from duties to deduct).
(6)This section is subject to—
section 583 (manufactured payments exceeding underlying payments), and
section 585 (manufactured payments: power to deal with special cases).
(7)Provision about the collection of income tax required to be accounted for and paid under this section may be included in regulations under section 586.
Textual Amendments
F3S. 920(1A) inserted (19.7.2011) by Finance Act 2011 (c. 11), Sch. 13 paras. 22(2), 31
F4S. 920(2A) inserted (19.7.2011) by Finance Act 2011 (c. 11), Sch. 13 paras. 22(3), 31
F5Words in s. 920(3) inserted (19.7.2011) by Finance Act 2011 (c. 11), Sch. 13 paras. 22(4), 31
921Cases where interest on underlying securities paid grossU.K.
(1)This section applies to manufactured interest which is representative of interest on—
(a)gilt-edged securities, or
(b)securities which are not gilt-edged securities but on which the interest is payable without deduction of income tax.
(2)Section 919(2) does not require any deduction of a sum representing income tax to be made on the payment of the manufactured interest.
(3)In this section “securities” includes loan stock or any similar security.