A special rate of tax that applied to banks and building societies from 1951 to 1991. This rate of tax was used to deduct tax from interest payments. The main disadvantage of the tax was that non-taxpayers were unable to reclaim the tax deducted from the interest paid to them. The change in 1991 resulted in tax being paid at basic rate, which could be reclaimed. A provision was also introduced enabling non-taxpayers to elect to have the interest paid gross.
Subjects: Business and Management.