What is the purpose of section 18B of the Taxes Management Act 1970?

Section 18B gives the Treasury broad power to make regulations dealing with cross-border savings income. Its aim is to ensure savings income is effectively taxed, whether the relevant arrangements arise from EU obligations or from agreements made with territories outside the EU, preventing tax avoidance through holding savings abroad.

How does section 18B define savings income?

For the purposes of section 18B, savings income means interest payments, excluding any types of interest specifically prescribed as exempt. It also includes other types of income that may be specified in the regulations, giving the Treasury flexibility to adapt the scope of the rules as international tax arrangements evolve.

What types of international arrangements are covered by section 18B?

Section 18B covers two broad categories. First, it can implement EU obligations ensuring savings income is taxed effectively across member states. Second, it gives effect to similar arrangements agreed with territories outside the EU, such as Crown dependencies, ensuring savings income does not escape taxation across national borders.

What parliamentary oversight applies to regulations made under section 18B?

Regulations under section 18B are made by statutory instrument and subject to the negative resolution procedure. They become law unless the House of Commons passes a resolution to annul them. This provides parliamentary oversight while allowing the Treasury to act relatively quickly in response to changing international obligations.

Taxes Management Act 1970 section 18B

Savings income: regulations about European and international aspects

Section 18B gives the Treasury power to make regulations to ensure the effective taxation of savings income in both European and international contexts.

The Treasury may make regulations to implement EU obligations or international arrangements aimed at ensuring effective taxation of savings income.
Savings income is defined as interest (excluding certain prescribed types) or other sums of a prescribed description.
These regulations are made by statutory instrument and are subject to annulment by the House of Commons.
The provision covers arrangements with both EU member states and territories outside the EU.

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