Section 901: Deduction from annual payments made by other persons
2731.This section requires persons other than individuals to deduct sums representing income tax from annual payments. It is based on sections 4, 347A(3), 348(1) and 349(1) of ICTA and sections 727 to 728 of ITTOIA.
2732.For persons other than individuals the range of payments within sections 348(1) and 349(1) of ICTA is wider than it is for individuals because the provision that certain payments are not to be charges on income (section 347A(1) of ICTA and section 727 of ITTOIA) applies only to payments by individuals. Accordingly, while section 900 applies only to commercial payments, this section applies to any annual payment that is a qualifying annual payment within section 899.
2733.This section does not apply to a payment made by an individual’s personal representatives unless it would have constituted a commercial payment within section 900 if paid by the individual before the individual’s death.
2734.Subsections (3) to (5) set out the conditions that determine which method is used to collect the tax. Deduction at the applicable rate (see the commentary on section 902) is mandatory in all cases, but the method of recovery depends on whether the payer does, or does not, have any modified net income in the year in which payment is made.
2735.If the payer has some modified net income, then the tax is collected as part of the payer’s self-assessment by virtue of Chapter 17. If the payer has no modified net income, then the tax is collected under Chapter 15 if the payer is a UK resident company, and otherwise under Chapter 16. See Changes 81 and 138 in Annex 1 and the commentary on section 900.
2736.Where the payer is not an individual and will not be accounting for the tax under Self Assessment, the term “the person by or through whom the payment is made” has been retained.
