INTM333520 - Double Taxation Applications and Claims: repayment interest: Entitlement
Source: gov.uk (2025-11-04)


Who is entitled to repayment interest?

With effect from 1 July 2025

From 1 July 2025 repayment interest will be payable in respect of repayments of income tax to companies which are within the charge to UK Corporation Tax with regards the underlying income. This will apply to UK resident companies and to non-resident companies carrying on a business in the UK through a Permanent Establishment with regards the income which is chargeable to UK Corporation Tax.

If a company within the charge to UK Corporation Tax receives income under deduction of income tax at source, repayment interest under s826 ICTA may apply if the Corporation Tax liability for the accounting period is exceeded by the income tax suffered at source.

Repayment interest will therfore no longer apply in respect of claims for relief made under a relevant Double Taxation Agreement (DTA) with the UK.

Up to and including 30 June 2025

Up to and including 30 June 2025, any company (including an unincorporated concern) resident in a member state of the European Union (EU)/European Economic Area (EEA) may be entitled to repayment interest on any repayment of income tax or payment of tax credit (see INTM333510 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm333510)) following a successful claim to Treaty relief (Treaty relief refers to the relief available under a double taxation agreement between the UK and another country. See INTM151040 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm151040) for further details). This is because HMRC applied a conforming interpretation of an accounting period in line with judgments of the European Courts. HMRC is no longer applying a conforming interpretation following the UK’s exit from the European Union to claims for relief from UK income tax made under a relevant DTA in respect of payments of income received within periods of account on or after 1 July 2025.

Any UK resident company within the charge to UK Corporation Tax and any non-resident company that is within the charge to UK Corporation Tax (non-resident companies with a UK Permanent Establishment where the relevant income is brought into the charge to Corporation Tax) is also entitled to repayment interest on the income tax repayment if the UK Corporation Tax charge is exceeded by the income tax suffered.

A list of member states of the EEA is included at INTM333530 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm333530).

Further details on s826 repayment interest can be found in CTM92310 (https://www.gov.uk/hmrc-internal-manuals/company-taxation-manual/ctm92310).

Examples:

For repayments of income tax made to companies which are within the charge to UK Corporation Tax (UK resident companies or non-resident companies carrying on a business in the UK through a Permanent Establishment):

· For income received in an accounting period ending on say 31 March 2025, s826 interest will run from the day following the accounting period end (i.e. 1 April 2025) up until the date of repayment of the income tax.

· For income received in an accounting period ending on say 31 July 2025, s826 interest will run from the day following the accounting period end (i.e. 1 August 2025) up until the date of repayment of the income tax.

There is therefore no change for these companies.

For repayments of income tax made to companies resident in the EU/EEA and not within the charge to Corporation Tax:

For income received in a period ending on or before 30 June 2025:

· EU/EEA resident companies which make a successful claim for relief from UK income tax under a relevant DTA with the UK will be entitled to receive repayment interest added to the repayment of income tax for income received in a period which ended on or before 30 June 2025.

· Therefore, for an accounting period ending on say 30 April 2025, s826 interest will run from the day following the accounting period end (i.e. 1 May 2025) up until the date of repayment of the income tax.

For income received in a period on or after 1 July 2025:

· repayment interest under s826 will not apply to repayment of income tax in respect of payments of income made on or after 1 July 2025 since the UK will no longer be applying a conforming interpretation to s826. Only companies within the charge to Corporation Tax with regards to the income will qualify for repayment interest.

Note that companies not resident in an EEA member state or an associated territory do not qualify for repayment interest unless they are within the charge to UK Corporation Tax for the period in which they received the income to which the repayment relates.