Withholding tax processing

Withholding tax is typically a government requirement. The payer of income withholds or deducts direct tax from the payment and pays the tax to the government. Accounts payable withholding tax encompasses situations where amounts are held back from payments to the vendor and the payments are reported to the government.

United Kingdom specifics

In the UK, withholding tax is a method of collecting tax at the source from the person or legal entity who makes a payment. This withholding method is used instead of creating an assessment to the recipient.

The practice of withholding tax applies only to payments of an income nature. Withholding tax is deducted from payments at the basic rate of tax. UK law does not require any withholding from a payment of a capital nature.

For sub-contractors, tax is withheld at the 20% UK basic rate of income tax for those who are registered. As an incentive to register, tax is withheld at 30% for sub-contractors who are not registered.

How Infor meets the requirement

See the Financials Setup and Administration Guide.

See the Payables User Guide.