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HMRC internal manual

Savings and Investment Manual

Interest: exemptions: other statutory exemptions

Other statutory exemptions

There are a number of other statutory exemptions for interest in Chapter 9 of Part 6 of ITTOIA05. The main ones are as follows.

Repayment supplement

A repayment supplement is added when HMRC makes a repayment of income tax, surcharge on late paid tax, or penalty to an individual or other non-corporate. Under ITTOIA05/S749, this is not treated as income for any purposes. There are corresponding provisions for supplement on repayments of capital gains tax, stamp duty or inheritance tax.

In a similar way, a VAT repayment supplement paid under Section 79 Value Added Tax Act 1994 is non-taxable (ITTOIA05/S777). This exemption does not apply to interest paid under S78 of the same Act.

Personal injury damages

See SAIM2330.

Student loans

If someone makes an over-repayment of a student loan, they will receive back the overpaid amount with interest. ITTOIA/S753 provides that such interest is non-taxable.

Other exemptions

Chapter 9 of Part 6 of ITTOIA05 lists a number of exemptions for interest. These are interest from

  • tax reserve certificates (ITTOIA05/S750);
  • employees’ share schemes (ITTOIA05/S752);
  • late payments of employer’s pension contributions (ITTOIA05/753A);
  • redemption of funding bonds (SAIM2210) (ITTOIA05/S754);
  • foreign currency securities owned by non-UK residents (ITTOIA05/S755);
  • deposits of victims of Nazi persecution (ITTOIA05/S756A);
  • between associated companies in EU member states (ITTOIA05/757).