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Private Placement Exemption: New UK withholding tax exemption for private placements

The new rules at a glance

Broadly, from 1 January 2016, there will be no UK withholding tax on interest payments on a loan/security which meets all of the requirements below:

  • not listed on a recognised stock exchange
  • term of not more than 50 years and a minimum value of £10 million
  • it represents a loan relationship to which a company is a party as debtor
  • the debtor and each creditor are not connected
  • the ultimate beneficial owner of the interest is resident in a country with a UK double tax treaty containing a nondiscrimination article (the vast majority of UK tax treaties do)

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UK borrowers have a much wider range of options when searching for lenders worldwide.

Lenders have a greater range of potential tax efficient investment structures available.

No need to list bonds (in order to make use of the Quoted Eurobond exemption) – saving time and money.

UK lenders and borrowers may no longer need to rely on double tax treaties to receive or make payments of interest free of UK withholding tax.

Applies to loan-type arrangements (as well as note instruments).

Applies to securities issued at any time, so existing bonds may be included.


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