Income Tax (Trading and Other Income) Act 2005

Yn ddilys o 06/04/2005

Chapter 7 U.K. Annual payments not otherwise charged

683 Charge to tax on annual payments not otherwise charged U.K.

(1) Income tax is charged under this Chapter on annual payments that are not charged to income tax under or as a result of any other provision of this Act or any other Act.

(2) Subsection (1) does not apply to annual payments that would be charged to income tax under or as a result of another provision but for an exemption.

(3) The frequency with which payments are made is ignored in determining whether they are annual payments for the purposes of this Chapter.

(4) For exemptions, see in particular—

(a) sections 727 to 730 (certain annual payments by individuals),

(b) section 731 (periodical payments of personal injury damages),

(c) section 732 (compensation awards),

(d) section 734 (payments from trusts for injured persons),

(e) sections 735 to 743 (health and employment insurance payments),

(f) sections 744 to 747 (payments to adopters),

(g) section 748 (payments by persons liable to pool betting duty),

(h) sections 757 to 767 (interest and royalty payments), and

(i) section 776 (scholarship income).

684 Income charged U.K.

(1) Tax is charged under this Chapter on the full amount of the annual payments arising in the tax year.

(2) Subsection (1) is subject to Part 8 (foreign income: special rules).

(3) The amount charged under this Chapter in the case of certain payments made by trustees in the exercise of a discretion is subject to section 687 of ICTA (grossing up of discretionary payments from trusts).

685 Person liable U.K.

The person liable for any tax charged under this Chapter is the person receiving or entitled to the annual payments.

Yn ddilys o 19/07/2006

[F1 685A Settlor-interested settlements U.K.

(1) This section applies if—

(a) a person receives an annual payment in respect of income from the trustees of a settlement,

(b) the payment is made in the exercise of a discretion (whether of the trustees of the settlement or any other person), and

(c) a settlor is charged to tax under section 619(1) on the income arising to the trustees of the settlement (whether in the current year of assessment or in a previous year of assessment) out of which the annual payment is made.

(2) This section applies only in respect of that proportion of the annual payment which corresponds to the proportion of the total income arising to the trustees of the settlement in respect of which a settlor is chargeable to tax under section 619(1).

(3) If and in so far as this section applies, the recipient of the annual payment shall be treated for the purposes of this Chapter as having paid income tax at the higher rate in respect of the annual payment.

(4) But—

(a) tax which the recipient is treated by virtue of this section as having paid is not repayable,

(b) tax which the recipient is treated by virtue of this section as having paid may not be taken into account in relation to a tax liability of the recipient in respect of any other income of his, and

(c) the annual payment shall be treated for the purposes of sections 348 and 349(1) of ICTA as payable wholly out of profits or gains not brought into charge to income tax.

(5) If the recipient of the annual payment is a settlor in relation to the settlement, if and in so far as this section applies the annual payment shall not be treated as his income for the purposes of the Income Tax Acts (and subsection (3) does not apply).

(6) Section 687 of ICTA shall not apply in relation to an annual payment if and in so far as this section applies.]

Textual Amendments

F1 S. 685A inserted (19.7.2006 with effect as mentioned in Sch. 13 para. 6(2) of the amending Act) by Finance Act 2006 (c. 25), s. 89, Sch. 13 para. 6(1)

686 Payments received after deduction of tax U.K.

(1) Income tax deducted under either of the following sections from an annual payment within this Chapter is treated as income tax paid by the recipient—

• section 348(1)(b) of ICTA (under which income tax may be deducted from some payments by the payer), and

• section 349(1)(a) of that Act (under which income tax must be deducted from some payments by the payer).

(2) See also section 687(2) of that Act (sum treated as deducted from payments made under a discretionary trust treated as income tax paid by the person to whom the payment is made or the settlor).