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HMRC internal manual

Savings and Investment Manual

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HM Revenue & Customs
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Deduction of tax: yearly interest: UK source: specialty debt

Debt paid under a deed

Finance Act 2013 amended ITA07/S874 by inserting a new subsection (6A) to provide that in determining whether yearly interest arises in the UK for the purposes of the duty to deduct income tax at source, no account is to be taken of the location of a deed under the terms of which interest is payable. HMRC’s view is that the physical location of the deed does not determine the source of the interest, but the amendment puts it beyond doubt that the duty to deduct tax at source applies in cases of what is known as ‘specialty debt’ (that is, debt paid under a deed).