United Kingdom

Corporate - Withholding taxes

Last reviewed - 12 February 2024

Under UK domestic law, a company may have a duty to withhold tax in relation to the payment of either interest or royalties (or other sums paid for the use of a patent). The circumstances in which such a liability arises are discussed below.

There is no requirement to deduct WHT from dividends, except in respect of property income dividends (PIDs) paid by UK REITs, which are subject to WHT at 20%, subject to certain exemptions. Therefore, dividends (apart from PIDs) may always be paid gross, regardless of the terms of the applicable DTT.

Please note, however, that this is not an exhaustive list of all the deductions that might be required to be made in respect of UK tax from payments made to or by companies. In particular, non-resident companies that are subject to UK tax on UK-source rental profits (see the Taxes on corporate income section for more information) will find their letting agent or tenants are obligated to withhold the appropriate tax at source (currently 20% without any allowances) from their rental payments unless the recipient has first applied and been given permission to receive gross rents under the NRL scheme. Companies are also under an obligation to withhold tax from annual payments. Two other important examples are the UK's deduction at source regime for entertainers and sportsmen, and the scheme under which payments to unregistered subcontractors working on big building projects may need to have tax deducted at source.

Interest WHT

As a general rule, UK domestic law requires companies making payments of UK-source interest to withhold tax at 20%, regardless of where they are resident. However, there are a number of exceptions to this general rule. The key exclusions are:

  • Payments of interest by UK resident companies if the beneficial owner of the interest is also a UK resident company, or a UK PE, provided the interest concerned will be taxed in the United Kingdom as part of the PE's trading profits.
  • Payments of interest on a quoted Eurobond.
  • Payments of interest paid to or by a UK bank (or a UK PE of a foreign bank).
  • Payments of 'short' interest. This is, broadly speaking, interest on loans that will not be in place for more than a year. However, the definition can be contentious, and detailed advice should be taken on this if intending to utilise this exemption.
  • Payments of interest that do not 'arise' in the United Kingdom. Whether a payment constitutes UK-source interest is a complex issue, and specialist advice needs to be taken if seeking to use this exception.
  • Payments of interest on private placement debts (widely defined) of UK companies.
  • Payments of interest made prior to 1 June 2021 (or 3 March 2021 where anti-abuse measures are applicable) that would have qualified for exemption under the EU Interest and Royalties Directive prior to Brexit.
  • Eligible payments made by a QAHC. 

If none of the exceptions apply, a payment of interest must be made after the deduction of WHT unless (or until) HMRC has given authorisation that the payment may be made gross (or with a reduced rate of WHT) because of the applicability of treaty relief for the recipient.

Royalties WHT

UK domestic law requires companies making payments of patent, copyright, design, model, plan, secret formula, trademark, brand names, and know how royalties that arise in the United Kingdom to deduct WHT at 20%, regardless of where they are resident. In addition, there is also the possibility that other royalties that arise in the United Kingdom may also be subject to the same rate of WHT if they constitute 'qualifying annual payments', so specialist advice will be needed to clarify this. However, certain types of royalties, such as film royalties and equipment royalties, will generally not be subject to UK WHT.

In certain circumstances, and subject to certain conditions, royalty payments may be made gross (or with a reduced rate of WHT) where:

  • the beneficial owner of the corresponding income is a UK resident company (or trading in the United Kingdom through a PE or a partnership in which the partners meet specific conditions)
  • relief is available under a DTT, or
  • payment was made prior to 1 June 2021 (or 3 March 2021 where anti-abuse measures are applicable) of an amount that would have qualified for exemption under the EU Interest and Royalties Directive prior to Brexit.

Unlike the rule regarding interest, where such a relief is available, a company may make a royalty payment gross of WHT (or subject to a reduced rate of WHT under a treaty) without prior clearance having been given by HMRC if they reasonably believe at the time that the relief is due. However, if that belief is later found to be incorrect, HMRC may direct that the payment must be made net of WHT, with the WHT paid to HMRC, and the payer may be subject to interest and penalties in respect of the WHT that should have been withheld (even if their belief was reasonable).

Double taxation treaties (DTTs)

The tables below set out the rates of WHT applicable to the most common payments of dividends, interest, and royalties under UK domestic law where such a liability arises and the reduced rates that may be available under an applicable DTT. Please refer to specific treaties to ensure the values are up-to-date and ensure you have considered the potential impact of the Multilateral Instrument (MLI). The MLI came into force in the United Kingdom on 1 October 2018. The MLI will have a fundamental impact on how taxpayers access any DTT that both contracting states have opted to be covered by the MLI, subject to the options and reservations both have made in relation to a range of matters (including the date on which it will take effect for particular taxes).

Note that following Brexit and the end of the transition exit period on 31 December 2021, payments of interest, royalties, and dividends to UK companies ceased to qualify for relief under the Interest and Royalties Directive (IRD) and the Parent-Subsidiary Directive (PSD), respectively, from 1 January 2021. The United Kingdom had incorporated the IRD into domestic law in a way that did not rely on the UK being a member of the European Union to continue to be effective, so UK companies initially continued to be able to pay interest and royalties without deducting WHT in circumstances where the IRD would have applied. However, that UK legislation was repealed with effect from 1 June 2021 (or 3 March where anti-abuse measures apply). From that date, payments of interest and royalties by UK companies to associated companies resident in the European Union are subject to WHT unless relief is available under the applicable DTT (and subject to the conditions and limitations of that treaty). The United Kingdom does not impose WHT on dividend payments, so the loss of the PSD does not impact the WHT on dividend payments made by UK companies.


There is generally no requirement to deduct WHT from dividends. 

An exception is in respect of PIDs paid by UK REITs, which are subject to WHT at 20%, subject to certain exemptions. However, the recipient may be entitled to reclaim some or all of the WHT under the terms of any applicable DTT or as a result of any other relevant exemption. 

Therefore, dividends (other than PIDs) are always paid gross.


As discussed in more detail above, WHT applies only to 'annual interest' (i.e. excluding interest on certain short-term loans). Banks and similar financial institutions are also normally able to pay annual interest to non-UK residents free of WHT. In addition, most of the UK treaties provide for a zero-rate of withholding on interest paid to governmental and quasi-governmental lenders. Such exemptions are not separately indicated in the tables below.

Resident recipients

Resident recipient WHT (%)
Interest Royalties
Corporations 0/20 (1) 0/20 (1)
Individuals 20 20


  1. Payments to any UK resident company can be made free of WHT if the recipient is chargeable to tax on the interest or royalty.

Non-resident recipients

Non-resident recipient corporations and individuals WHT (%)
Interest Royalties
Non-treaty territories 20 20
Treaty territories:
Albania 6 0
Algeria 7 10
Antigua and Barbuda 20 0
Argentina 12 3/5/10/15 (1)
Armenia 5 5
Australia 0/10 (2) 5
Austria  0 0
Azerbaijan 10 5/10 (4)
Bahrain 0/20 (7) 0
Bangladesh 7.5/10 (2) 10
Barbados 0 0
Belarus 5 5
Belgium 0/10 (5) 0
Belize 20 0
Bolivia 15 0/15 (4)
Bosnia-Herzegovina 10 10
Botswana 10 10
Brazil (not yet in force) 7/10/15 (7) 10
British Virgin Islands 20 20
Brunei 20 0
Bulgaria 0/5 (7) 5
Canada 0/10 (7) 0/10 (4, 6)
Cayman Islands 20 20
Channel Islands:    
Guernsey (includes Alderney and Hern) 0/20 (7) 0/20 (7)
Jersey  0/20 (7) 0/20 (7)
Chile 4/5/10 (2) 2/10 (6)
China (excludes Hong Kong) 10 6/10/20 (4, 8)
Colombia 10 10
Croatia 0/5 (7) 5
Cyprus  0 0
Czech Republic 0 0/10 (11)
Denmark 0 0
Egypt 15 15
Estonia 0/10 (2) 0
Eswatini 20 0
Ethiopia 5 7.5
Falkland Islands 0 0
Faroe Islands 0 0
Fiji 10 0/15 (4)
Finland 0 0
France 0 0
Gambia 15 12.5
Georgia 0 0
Germany 0 0
Ghana 12.5 12.5
Gibraltar 0/20 (7) 0/20 (7)
Greece 0 0
Grenada 20 0
Guyana 15 10
Hong Kong 0 3
Hungary 0 0
Iceland 0 0/5 (11)
India 10/15 (2) 10/15 (6)
Indonesia 10 10/15/20 (7, 8)
Ireland, Republic of 0 0
Isle of Man  0/20 (7) 0/20 (7)
Israel 5/10 (2) 0
Italy 0/10 (6) 8
Ivory Coast (Côte d’Ivoire) 15 10
Jamaica 12.5 10
Japan 0/10 (10) 0
Jordan 10 10
Kazakhstan 10 10
Kenya 15 15
Kiribati 20 0
South Korea (Republic of Korea) 10 2/10 (8)
Kosovo 0 0
Kuwait 0 10
Kyrgyzstan (in force 1 January 2024) 5 5
Latvia 10 0
Lesotho 10 7.5
Libya 0 0
Liechtenstein 0 0
Lithuania 0/10 (7) 0/5/10 (4, 8)
Luxembourg (0% on royalties in new treaty, not yet in force) 0 5
Malawi 0/20 (3) 0/20 (3)
Malaysia 10 8
Malta 10 10
Mauritius 20 15
Mexico 5/10/15 (7) 10
Moldova 5 5
Mongolia 7/10 (2) 5
Montenegro 10 10
Montserrat 20 0
Morocco 10 10
Myanmar 20 0
Namibia 20 0/5 (4)
Netherlands 0 0
New Zealand 10 10
Nigeria 12.5 12.5
North Macedonia 0/10 (5) 0
Norway 0 0
Oman 0 8
Pakistan 15 12.5
Panama 0/5/20 (7) 5
Papua New Guinea 10 10
Philippines 10/15 (7) 15/20 (9)
Poland 0/5 (2) 5
Portugal 10 5
Qatar 0/20 (7) 5
Romania 10 10/15 (4)
Russian Federation (12) 0 0
St. Kitts and Nevis (St. Christopher and Nevis) 20 0
San Marino (not yet in force) 0/20 (7) 0
Saudi Arabia 0 5/8 (8)
Senegal 10 6/10 (8)
Serbia 10 10
Sierra Leone 20 0
Singapore 0/5 (2) 8
Slovak Republic 0 0/10 (4)
Slovenia 0/5 (7) 5
Solomon Islands 20 0
South Africa 0 0
Spain 0 0
Sri Lanka 10 0/10 (9)
Sudan 15 10
Sweden 0 0
Switzerland 0 0
Taiwan 10 10
Tajikistan 10 7
Thailand 20 5/15 (9)
Trinidad and Tobago 10 0/10 (9)
Tunisia 10/12 (2) 15
Turkey (excludes North Cyprus) 15 10
Turkmenistan 10 10
Tuvalu 20 0
Uganda 15 15
Ukraine 5 5
United Arab Emirates 0/20 (7) 0
United States 0/15 (11) 0
Uruguay 10 10
Uzbekistan 5 5
Venezuela 5 5/7 (7)
Vietnam 10 10
Zambia 10 5
Zimbabwe 10 10


UK domestic law generally charges WHT on patent, copyright, and design royalties, although there can be definitional uncertainties. Many treaties allow reduced rates for a wider range of royalties. These are mentioned in this table, even though there may be no UK WHT applied under domestic law.

  1. 3% for news; 5% for copyright; 10% industrial; 15% other royalties.
  2. Lower rate for loans from banks and financial institutions.
  3. Higher rate applies if recipient controls more than 50% of payer.
  4. Lower rate applies to copyright royalties.
  5. 0% on loans between businesses.
  6. Lower rate applies to industrial, commercial royalties.
  7. Specific additional conditions apply for lower rate.
  8. Lower rate applies for equipment royalties.
  9. Lower rate applies to films, TV, and radio.
  10. Higher rate applies to certain profit related interest.
  11. Specific conditions apply for higher rate.
  12. The United Kingdom considers its tax treaty with Russia to remain in force and has stated its intention to continue to comply with its terms, despite receiving notification from Russia that it has suspended substantially all of the UK-Russia tax treaty.