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HMRC internal manual

Corporate Finance Manual

Other tax rules on corporate finance: deduction of tax: relevant investments

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.