Other terminology: Rate of withholding tax
Where UK residents opt not to disclose the details of their assets to HMRC in tax years following when the agreement comes into effect, the paying agents will deduct an appropriate amount of withholding tax from their future income and gains. This effect of this deduction will mean that, in the absence of an election under Article 23, the taxpayer will cease to be liable to UK tax on the relevant income and gains.
The rate of withholding tax is based on the appropriate UK rate for the period and type of taxable income. There is a slight reduction to adjust for the fact that the tax will be received slightly earlier by HMRC under this process than it would have been had it been paid through the usual Income Tax Self Assessment (ITSA) procedure.