Income Tax (Trading and Other Income) Act 2005 section 755

Interest on foreign currency securities etc. owned by non-UK residents

Section 755 provides an income tax exemption for interest on certain Treasury-directed foreign currency securities and loans where the beneficial owner or person entitled to repayment is not resident in the UK.

• The exemption covers interest on foreign currency securities issued by local authorities or statutory corporations, and foreign currency loans made to statutory corporations, but only where the Treasury has specifically directed that the exemption applies
• No income tax arises on qualifying interest where the beneficial owner of the security, or the person entitled to repayment of the loan, is not resident in the UK
• The exemption does not apply where anti-avoidance rules treat the interest as the income of another person — specifically the settlements rules that attribute income to a settlor, or the transfer of assets abroad provisions
• A statutory corporation means one incorporated by Act of Parliament (other than a company registered under the Companies Act) or one on which statutory functions relating to an undertaking have been conferred