INTM342160 - DT applications and claims - Types of income: Interest

Eurobonds

Before 31 March 2001 where a UK company issued loan stock that qualified by reference to ICTA88/S124 as a quoted eurobond then, subject to certain conditions, it could pay interest without deduction of tax. Where those conditions were not complied with tax had to be deducted.

For the purposes of ICTA88/S124, quoted eurobonds are defined as

  1. interest bearing securities in bearer form
  2. issued by UK companies
  3. quoted on a Stock Exchange recognised by the Board of HM Revenue and Customs.

If tax was deducted from interest payments repayment can only be claimed if the beneficial owner is entitled to benefit from the terms of the interest article in one of our double taxation agreements (DTAs). You should consider any claim in the normal way under the terms of the interest article of the DTA.

The legislation that applies to payments of interest from sources within the UK changed to enable interest that is paid on a eurobond after 31 March 2001 to be paid without deduction of tax.

A eurobond is now defined at ITA07/S987 as any security that

  1. is issued by a company
  2. is listed on a recognised stock exchange
  3. carries a right to interest

Other amounts of interest that are paid by a company remain payable after deduction of tax.