§ Mr. Barnettasked the Chancellor of the Exchequer, if it is in order, under his regulations, for interest in car sales to be paid net after deduction of tax at the standard rate; whether he will allow tax to be deducted from interest charged by banks, so that such interest is debited net on all overdrafts; and if he will make a statement on interest payments generally.
§ Mr. MacDermotWhether tax is deductible depends on the full facts of the transaction. The statutory provisions dealing with deduction of Income Tax from interest are contained in Sections 169 and 170 of the Income Tax Act, 1952. Normally interest paid to a bank on an overdraft is paid out of taxed income but is not yearly interest: in these circumstances tax is not deductible but the payer may be entitled under Section 200 of the Income Tax Act, 1952, to186W claim repayment of tax on the amount of the interest.