Introduction

UK tax must be withheld on UK payments including:

1. •

   interest

2. •

   royalties

3. •

   rental income

UK withholding tax may be reduced under the provisions of a double tax treaty (DTT). Prior to 1 June 2021, payments of interest and royalties made to EU resident associated companies were also exempt from UK withholding tax, under the UK domestic legislation which gave effect to the EU Interest and Royalties Directive. This legislation was repealed from 1 June 2021, with no exemption from UK withholding taxes on payments to EU associated companies permitted from that date, even in cases where HMRC has previously provided clearance (known as an exemption notice) which extends beyond 1 June 2021. While the changes affect payments made on or after 1 June 2021, anti-forestalling provisions also apply from 3 March 2021 to counteract attempts to put arrangements in place between these dates.

A