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HMRC internal manual

International Manual

HM Revenue & Customs
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DT applications and claims - Types of income: Interest

Free of tax

You may have an interest claim where the contract between the lender and the borrowerprovides for an interest payment “free of tax” or “without (or after)deduction of UK tax” and does not mention the basic rate. The lender who receives theinterest payment is not entitled to any repayment of UK income tax.