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HMRC internal manual

Corporate Finance Manual

Other tax rules on corporate finance: deduction of tax: payment without deduction of tax

Payment without deduction of tax

An investor may register an account for payment of interest without deduction of basic rate tax if they are an individual who is ordinarily resident in the UK, and they do not expect to be liable to income tax for the year in which the interest is paid. The registration is made on form R85.

Once the deposit-taker receives a fully completed R85, they must make all subsequent interest payments without deducting tax until the account is de-registered, or the investor dies or becomes bankrupt, or an investor who is a child reaches the age of 16. They do not have to check the accuracy of the information that the investor provides.

An account is de-registered if the investor instructs the bank to do so - as they must do if they realise they are, or will be, liable to tax. HMRC’s Savings Scheme Office (SSO) can also instruct a bank to de-register an account if they have reason to believe that registration is not appropriate.