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The obligation to deduct tax at source

A4.401 Withholding tax deducted at source—overview

Deduction of tax at source, or 'withholding tax', is a method of collecting tax from the payer of certain types of payment (for example, on a payment of interest). It is essentially a way of shifting the administrative burden to the payer even though the tax liability ultimately belongs to the recipient. The payer must deduct an amount representing income tax (usually at the basic rate) from the payment before making it, so that only the net amount remaining after the deduction is paid to the recipient. The tax deducted must then be paid over to HMRC. The tax deducted is often known as 'withholding tax' (WHT), particularly in the international context.

This article outlines how the commentary in this division covers the duty to deduct tax, which is as follows:

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   •ÌýÌýÌýÌý the types of payment from which tax must be deducted and the exceptions that apply (A4.421–A4.443)

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   •ÌýÌýÌýÌý withholding