HMRC has issued two new tax information and impact notes explaining HM Treasury regulations coming into force on 29 November 2019, which ensure that interest payments made on certain hybrid instruments issued by banks and insurers as regulatory capital under new Bank of England requirements continue to receive a tax deduction. These regulations have effect for payments made on or after 1 January 2019 and will be replaced from 1 January 2020 by new regulations to comply with more stringent rules under the EU anti-tax avoidance directive.
The Hybrid and Other Mismatches (Financial Instrument: Exclusions) Regulations, SI 2019/1251, come into force on 29 November 2019 and take effect in relation to interest payments made on or after 1 January 2019 on qualifying debt-like hybrid regulatory capital instruments. The objective of the regulations is to preserve current treatment allowing a tax deduction for interest paid on hybrid instruments, where these are issued by banks and insurers to meet regulatory requirements.
These will be replaced from 1 January 2020 by The Hybrid and Other Mismatches (Financial Instruments: Excluded Instruments) Regulations, SI 2019/1345, introducing further requirements needed to ensure the UK rules comply with minimum standards under the EU anti-tax avoidance directive. This includes limiting the exemption to the banking sector and requiring withdrawal of the exemption altogether after 31 December 2022.
See Hybrid and other mismatches: exemptions for regulatory capital (bit.ly/2NLTNXf) and Hybrid and other mismatches: Exemptions for regulatory capital - compliance with EU Anti-Tax Avoidance Directive (bit.ly/2PPhY9V).
HMRC has issued two new tax information and impact notes explaining HM Treasury regulations coming into force on 29 November 2019, which ensure that interest payments made on certain hybrid instruments issued by banks and insurers as regulatory capital under new Bank of England requirements continue to receive a tax deduction. These regulations have effect for payments made on or after 1 January 2019 and will be replaced from 1 January 2020 by new regulations to comply with more stringent rules under the EU anti-tax avoidance directive.
The Hybrid and Other Mismatches (Financial Instrument: Exclusions) Regulations, SI 2019/1251, come into force on 29 November 2019 and take effect in relation to interest payments made on or after 1 January 2019 on qualifying debt-like hybrid regulatory capital instruments. The objective of the regulations is to preserve current treatment allowing a tax deduction for interest paid on hybrid instruments, where these are issued by banks and insurers to meet regulatory requirements.
These will be replaced from 1 January 2020 by The Hybrid and Other Mismatches (Financial Instruments: Excluded Instruments) Regulations, SI 2019/1345, introducing further requirements needed to ensure the UK rules comply with minimum standards under the EU anti-tax avoidance directive. This includes limiting the exemption to the banking sector and requiring withdrawal of the exemption altogether after 31 December 2022.
See Hybrid and other mismatches: exemptions for regulatory capital (bit.ly/2NLTNXf) and Hybrid and other mismatches: Exemptions for regulatory capital - compliance with EU Anti-Tax Avoidance Directive (bit.ly/2PPhY9V).
