Obligation to withhold income tax from certain payments

When UK companies, or partnerships of which a company is a member, make certain types of payment, they are required to deduct income tax (at the basic rate) at source and pay it over to HMRC. In doing so they act as a collector of the UK tax that may be due from the recipient of the related income. The recipient will usually be able to claim relief against its UK or overseas tax liability for the tax suffered at source, as long as they are not based in a tax haven.

Income tax is only deductible from payments of yearly interest with a UK source when paid.

Yearly interest has no statutory definition but is accepted to be interest