Inland Revenue Publishes Draft EU Savings Tax Rules

by Jason Gorringe, Tax-News.com, london

25 September 2003

The United Kingdom took a further step forward on the road to implementation of the European Savings Directive after the Inland Revenue published its draft regulations on the reporting of savings income this week.

Businesses and public bodies that make savings income payments to, or collect savings income payments for, individuals resident overseas will have to report details on the individuals, and the payments made, to the Inland Revenue. Businesses affected may include:

• building societies, banks and other deposit-takers;
• registrars, custodians and nominees;
• authorised unit trusts and open-ended investment companies; and
• any other person who makes savings income payments in the course of their business or profession (for example, lawyers and stockbrokers).

The draft regulations set out the detail of the proposed reporting scheme. This scheme will build upon the current reporting regime for interest payments under sections 17 and 18 Taxes Management Act 1970.

Reports will be made annually. The details that have to be reported about individuals will include information on their identity and residence. Different rules will apply depending on whether individuals became a customer of the person paying the savings income before or after 1 January 2004.

A dedicated section of the Inland Revenue website (www.inlandrevenue.gov.uk/esd/index.htm) includes the draft regulations, together with a detailed commentary on the regulations and a updated partial Regulatory Impact Assessment, as well as the text of the Directive, a commentary on the Directive, a glossary and frequently asked questions. The closing date for comments on the draft regulations is 28 November 2003.

The first phase of the consultation on the broad aspects of the scheme ended on 22 August 2003. The discussion papers from that consultation can be found in 'Reference documents' in the dedicated section of the Inland Revenue web site. A summary of the responses to that consultation will be published shortly.

Consultation on the draft regulations for the collection of information on the payment of savings income to overseas residents will go on until 28 November. The final version of the regulations will be made later this year by the Treasury under powers in the Finance Act 2003.

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