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Avoid double taxation on your UK loan interest payments with overseas corporate lenders

Double Tax Treaty Passport Scheme

The double tax treaty passport scheme provides for double taxation relief for UK loan interest payments made by UK corporate borrowers to overseas corporate lenders. The scheme has expanded its scope of who may now opt in.

The scheme’s terms and conditions have been updated as of 6 April 2017 to expand the availability to all UK borrowers that are under the obligation to withhold tax. UK partnerships, individuals and charities can now also be admitted to the scheme.

The scheme is also now available to lenders whose income flows through to their investors or owners as well as sovereign investors and pension fund lenders, provided they are resident in the same jurisdiction and are entitled to the same treaty benefits.

The duration of a passport remains at five years, however the renewal process will be kept under review by the HMRC. HMRC is also considering digital changes to be made to the scheme.

Top tip government guidance: You should only use the Double Taxation Treaty Passport Scheme for loans that meet all conditions for relief under the relevant double taxation arrangements.

For further advice on taxation and cross border matters please contact our Tax team.