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HMRC internal manual

Double Taxation Relief Manual

HM Revenue & Customs
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Non-residents: UK income: Interest, royalties, pensions

Where an agreement provides that a person who is a resident of an agreement country is entitled to exemption or partial relief from United Kingdom tax on

a) interest,
b) copyright and patent royalties,
c) proceeds of sale of United Kingdom patent rights,
d) pensions except, normally, United Kingdom government pensions (see DT1926),
e) purchased annuities, or
f) other annual payments,

usually payable under deduction of United Kingdom tax, claims for such exemption or partial relief are to be made to FICO (International), Nottingham (see DT1800) which deals with any repayment of United Kingdom tax due to the non-resident.

Refer all Returns for Purchased Annuities and Copyright Royalties (in the literary world) to the Taxes Information Distribution Office (TIDO) Ty-Glas, Llanishen, Cardiff, CF4 5ZG.

Where the source of income for which the application is made is a pension assessable under Schedule E, the instructions at SE9200 onwards should be followed as appropriate.

Where the source of income is an agreement providing for payments of maintenance by a parent in the United Kingdom to a non-resident minor child or to a non-resident individual for or on behalf of such a child, the file should first be submitted to FICO (International), Bootle for advice on title to the payments, before a submission is made to FICO (International), Nottingham in connection with a claim for exemption or partial relief from United Kingdom tax, unless such advice is already held in the papers.

FICO (International), once they have approved the claim, will make the appropriate repayment to the claimant, and may issue a notice to the payer of income authorising the non-deduction of Income Tax from future payments or the deduction of Income Tax at the rate specified in the notice. A copy of the notice will be sent to the District for information and retention. Until the payer receives this notice he should continue to deduct tax at the appropriate domestic law rate from the payments he makes. Where appropriate, give relief to the payer in accordance with the instructions in DT1822, 1825, 1838 and 1839.

FICO (International) will re-investigate the title to exemption or partial relief at intervals and, where necessary, will issue a notice to the payer replacing or withdrawing the authority to pay income without deduction of tax or under deduction of tax at a reduced rate.

Send any information which appears likely to have a bearing on the title to exemption or partial relief to FICO (International). See also DT1825, second sub-para, as regards certain payments by companies which are not to be treated as distributions for company taxation purposes.

As regards

i) the records to be kept and reports to be made by Districts see DT1875 onwards;

ii) interest and royalties payable under agreements providing for payment of a specified sum after deduction of tax at the basic rate see DT1835;

iii) the procedure to be followed where relief is claimed in respect of interest or royalties payable under `free of tax’ agreements, see DT1836 onwards.