Other tax rules on corporate finance: deduction of tax: relevant investments
Banks and other deposit-takers must deduct basic rate tax from interest if the deposit is a relevant investment. To decide whether an account is a relevant investment, it is necessary to first look at the status of the investor. It may be a relevant investment if the person beneficially entitled to the interest is:
- an individual or individuals,
- a partnership (including a Scottish partnership), all the members of which are individuals,
- the personal representatives of a deceased person, or
- the trustees of a discretionary or accumulation trust.
But even where the investor is in one of these categories, there are a number of exceptions that may stop the account from being a relevant investment. CFM75060 describes the main exceptions.
A deposit will not be a relevant investment if it is held by:
- A company or unincorporated association; this includes joint accounts where at least one of the account holders is a company.
- A pension fund.
- A charity.
- A local authority or similar public body.
- A unit trust, whether authorised or unauthorised.