UK Withholding Tax On Interest: Simplification Or Risk Shift?

On 13 July 2026, HMRC published a consultation on simplifying the process for obtaining treaty relief from UK withholding tax on interest paid overseas.

The consultation considers whether UK payers should be able to apply treaty relief at source without first obtaining a formal direction from HMRC. If implemented, this could reduce delays, administrative burden and cash-flow issues under the current regime. However, it could also shift greater responsibility, and potentially greater risk, onto borrowers and other UK payers.

The proposals are likely to be significant for UK borrowers, institutional lenders, private credit funds, multinational groups and fund managers involved in lending into the UK.