Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Withholding tax definition

What does Withholding tax mean? Withholding tax is tax deducted at source from certain payments—commonly dividends, interest and royalties—often where the payee is non‑resident. It is a descriptive term used across tax practice; specific obligations and rates are set by statute and treaty (for the UK, principally the Income Tax Act 2007; for Ireland, the Taxes Consolidation Act 1997) and by double taxation agreements. United Kingdom (England & Wales, Scotland and Northern Ireland): withholding typically applies at 20% to interest and royalties, subject to domestic exemptions and treaty relief. The UK generally does not impose withholding on dividends, save for certain distributions (for example, REIT property...

UK exemption implementing Interest and Royalties Directive: withholding tax on interest and royalties to associated EU companies—conditions, beneficial ownership, notices, anti-avoidance, appeals and repeal (before 1 June 2021)

Published by a LexisNexis Tax expert

Practice notes

ARCHIVED:

This archived Practice Note summarises the former Withholding Tax exemption that applied to UK source yearly interest payments or Royalty payments made before 1 June 2021 (or, in some instances, before 3 March 2021) to associated EU company recipients.

The exemption was repealed by section 34 of the Finance Act 2021, taking effect for payments made on or after 1 June 2021 or, in particular cases, on or after 3 March 2021.

This Practice Note is no longer maintained and is provided for background reference only. For other UK withholding tax exemptions, see Practice Note: Exemptions and reliefs from UK withholding tax on yearly interest.

This Practice Note is relevant solely to UK source payments of interest and/or royalties made before 1 June 2021 or, in certain circumstances, before 3 March 2021. For further details, see: Brexit and repeal of UK legislation that gave effect to the Interest and Royalties Directive, below...

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Web page updated on 22/05/2026

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