The Finance (No.2) Bill 2015 contains provisions for an exemption from the obligation to deduct UK income tax from yearly interest paid on "qualifying private placements".
This measure was first announced on 3 December in the Chancellor's Autumn Statement 2014 and draft legislation for consultation was published a week later on 10 December 2014. The policy objective behind this provision, as announced by the UK Government in December 2014, is that the development of the private placement market will provide a new source of financing for mid-size businesses and infrastructure projects. The introduction of an exemption from the obligation to withhold income tax on yearly interest paid on such instruments removes an obstacle to the development of a market for UK-based private placements. The exemption is therefore a welcome addition to the raft of tax measures introduced by the UK Government since the announcement in 2010 of its long-term economic plan to boost British business.
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