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HMRC internal manual

International Manual

DT applications and claims - Types of income: Interest

UK Government securities

These loan stocks are sometimes referred to as ‘Gilts’ and are quoted on theLondon Stock Exchange.

Before 31 March 2001 tax was normally deducted from interest.

Two types of securities have been issued

  • Some under the conditions of ICTA88/S47 which provided that interest could be paid without deduction of tax to non-residents of the UK. These were commonly referred to as FOTRA stocks. This means that the claimant did not have to rely on the terms of a double taxation convention in order not to pay UK tax.
  • Other stocks were not issued on these terms. The only relief from UK tax that is available on these loan stocks is where the claimant is in a country with which the UK has a double taxation convention that provides for relief from UK tax to be allowed in respect of interest payments.
  • However, with effect from 6 April 1998 all Government Securities were deemed to have FOTRA status.

If a FOTRA item is claimed on a DT form you do not need to insist on an A1 claim. Ifrelief is available under the DT provisions you can proceed on that basis.

Since 31 March 2001 all interest that is paid on UK Government Securities is paid by theBank of England without deduction of UK tax.