Growing investment: How the new QPP Exemption will simplify processes and encourage debt investment into the UK

Where a UK corporate debtor makes payments of yearly interest to, among others, non-UK creditors, the debtor will be required to withhold an amount representing UK income tax (currently at a rate of 20%) from that payment and account to HMRC for the same. Generally, this mechanic is referred to as a ‘withholding tax’. However, that debtor will not be required to withhold where a domestic exemption, EU directive or double taxation treaty applies to eliminate the UK withholding tax.

With effect from 1 January 2016, a new exemption from UK withholding tax on payments of yearly interest, known as the Qualifying Private Placement Exemption (QPP Exemption), was introduced to sit alongside the existing domestic exemptions. In March 2018, HMRC published its guidance (the Guidance) on the practical application of the QPP Exemption in its Savings and Investment Manual. Read more.

This article was first published by Tax Adviser.