Corporation Tax Act 2009 section 1283

Interest from tax reserve certificates

Section 1283 exempts from corporation tax any interest earned on tax reserve certificates.

• Tax reserve certificates are instruments that companies can purchase from HMRC to set aside funds towards future tax liabilities
• When these certificates are eventually surrendered to meet a tax payment, any interest accrued on them is not subject to corporation tax
• This exemption ensures that companies are not taxed on the modest return they receive for effectively prepaying their tax
• The provision was originally based on section 46(2) of the Income and Corporation Taxes Act 1988 and was subsequently amended by Finance Act 2012