Mr. Batesasked the Chancellor of the Exchequer if he is considering bringing forward proposals to change the method by which tax credit relief is at present given to United Kingdom banks in respect of certain overseas lending transactions; and whether he will make a statement about this and the corresponding relief which is at present denied to foreign banks trading in the United Kingdom through branches.
§ Mr. DellThe whole question of tax credit relief for tax withheld from interest payments to United Kingdom banks, and to the United Kingdom branches of foreign banks, in respect of their overseas lending transactions is under review. Meanwhile the Inland Revenue will, with my approval, allow foreign banks trading in the United Kingdom through branches to claim tax credit relief against their United Kingdom corporation tax liabilities for tax withheld by foreign countries from interest payments on loans made to their residents, on the same basis as if the branch were a United Kingdom subsidiary company. The relief will be allowed for accounting periods ending in the current and subsequent financial years.