Income Tax Act 2007 section 919

Manufactured interest on UK securities: payments by UK residents etc.

Section 919 requires UK resident payers (or those trading in the UK through a branch or agency) to deduct income tax at source when they make manufactured interest payments on UK securities.

• When a person who is UK resident, or who trades in the UK through a branch or agency, makes a manufactured interest payment representing interest on UK securities, they must deduct income tax at the basic rate from the gross amount of that payment.
• UK securities include government securities, local authority securities, other public authority securities, and securities of UK resident companies or bodies — but do not include shares in a UK resident company.
• The rule does not apply where a UK resident company pays the manufactured interest through a permanent establishment outside the UK, provided the foreign permanent establishment profits exemption applies for the relevant accounting period.
• If the payer is a company, income tax collection follows the rules for company payers; otherwise, the general collection rules for non-company payers apply.