Taxes Consolidation Act 1997 section 257

Deduction of tax from relevant interest

Section 257 requires financial institutions to deduct deposit interest retention tax (DIRT) from relevant interest payments, sets out how deposits are to be treated for DIRT purposes, and removes relevant interest from the scope of section 246.

• A financial institution must deduct DIRT at the appropriate rate from the gross amount of any relevant interest it pays or credits, and the account holder must accept this deduction.
• Once DIRT has been deducted, the financial institution is treated as having paid the full gross amount to the account holder, protecting the institution against any claim for the difference.
• Every deposit held by a financial institution must be treated as a relevant deposit subject to DIRT unless the institution is satisfied it qualifies as an excluded deposit, such as a non-resident account.
• Interest subject to DIRT is removed from the scope of section 246, which requires tax deduction at source from certain interest payments, thereby avoiding any double deduction of tax.