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HMRC internal manual

International Manual

DT applications and claims: FOTRA securities

The FOTRA condition

Interest payments on UK Government securities issued with the FOTRA condition are exempt from UK income tax where the beneficial owner of the security is not ordinarily resident (if a company, not resident) in the UK.


Beneficial ownership of the security

To demonstrate beneficial ownership of the security, the claimant must hold the security on the interest date. In strictness a person who has sold a FOTRA security but receives the next interest payment due (an ex-dividend sale) ceases to be the beneficial owner of the security when he sells it.

There is a column on the A1 claim form with the heading ‘If sold, date of sale or write still held’. Entries in this column will alert you to a sale before the interest date. You should obtain guidance from Technical Advice Group before you take any action if

  • a FOTRA security was sold before the interest date
  • that column is left blank

If you have a claim on form C8 that form contains a declaration that the security was held by the declarant bank at the time of payment of the interest. You should check with Technical Advice Group before asking whether the security has been sold.

Not ordinarily resident

To obtain exemption form UK income tax the beneficial owner of the security must be not ordinarily resident in the UK.

For an individual this means that he/she can claim exemption from UK income tax on the interest from a FOTRA security even if he/she is resident in the UK but not ordinarily resident (R but NOR).

For guidance on whether an individual is not ordinarily resident in the UK see the guidance beginning at INTM334500.

For guidance about company residence see the guidance beginning at INTM335000.