Income Tax (Trading and Other Income) Act 2005 section 749A

Interest on tax overpaid

Section 749A provides that interest received on overpaid corporation tax is exempt from income tax.

• When HMRC repays overpaid corporation tax, they may add repayment interest to the amount returned.
• This repayment interest would normally be treated as income potentially subject to income tax.
• Section 749A creates a specific exemption so that no income tax liability arises on such interest.
• The exemption applies to interest paid under section 826 of ICTA, which governs interest on overpaid tax.