Income Tax Act 2007 section 921

Cases where interest on underlying securities paid gross

Section 921 provides an exception to the normal requirement to deduct income tax from manufactured interest payments, where the underlying real interest on the securities would itself be paid without tax deducted.

• Applies to manufactured interest that represents interest on gilt-edged securities (gilts) or on other securities where the real interest is paid gross (without income tax deducted)
• Where this section applies, there is no requirement to deduct a sum representing income tax when paying the manufactured interest — it is paid gross
• The principle is straightforward: if the real interest on the underlying security is paid without tax deducted, then the manufactured interest standing in for it should also be paid without tax deducted
• "Manufactured interest" carries the same meaning as defined in section 919, which deals with manufactured interest on UK securities paid by UK residents and similar persons