Income Tax (Trading and Other Income) Act 2005 section 369

Charge to tax on interest

Section 369 establishes that income tax is charged on interest and sets out the extended meanings of interest, the available exemptions, and related provisions in the Income Tax Act 2007.

• Income tax is charged on all interest, whether arising from UK or non-UK sources, and the definition of "interest" is extended to cover items such as building society dividends, investment company and unit trust interest distributions, offshore fund distributions, registered society and co-operative payments, funding bonds, FSCS compensation payments representing interest, and discounts.
• Several exemptions may apply, including those for national savings income, individual investment plan income, SAYE interest, FOTRA securities income, and a range of specific categories such as repayment interest, damages for personal injury, employees' share scheme interest, student loan repayment interest, and interest on deposits of victims of National-Socialist persecution.
• The charge is also subject to the exemption under the Income Tax Act 2007 for interest on certain securities covered by Chapter 2 of Part 12 of that Act.
• Where certain types of company are being wound up, receipts that would otherwise be taxed as interest may instead be charged to income tax under Chapter 3A of Part 14 of the Income Tax Act 2007.