What is Withholding Tax

johninblackpool

Hi Folks

My wife has just had her PPI claim upheld from MBNA and is getting a rather nice refund
On the breakdown of the amounts this is written

Less UK withholding tax -£533.44

What is this amount and why is it being deducted from the 8% gross interest amount.

Cheers
John

-taff

http://www.hmrc.gov.uk/taxon/foreign.htm

johninblackpool

Hi

But why is my wife being charge it in the first place it was a credit card not an overseas savings

societys_child

Thought tax was payable on the interest?

http://en.wikipedia.org/wiki/Withholding_tax

A withholding tax, also called a retention tax, is a government requirement for the payer of an item of income to withhold or deduct tax from the payment, and pay that tax to the government

-taff

It's also charged to foreigners who have income from abroad, and are curently living here. You'll have to ask the bank.

[Deleted User]

societys_child wrote: »

Thought tax was payable on the interest?

Yes, I think -taff's link was a little confusing. The Bank are obviously one of those which pay the tax from the interest prior to issuing the redress to the customer. I doubt it has anything to do with foreign investments!

-taff

Sorry....is this any better?

1. Income tax withheld from employees' wages and paid directly to the government by the employer.

2. A tax levied on income (interest and dividends) from securities owned by a non-resident.

For all we know, his wife is not british, so it may apply.....