Income and Corporation Taxes Act 1988

Deductibility of manufactured payment in the case of the manufacturer U.K.

2A [F1 (1) Where, in the case of a manufactured dividend, the dividend manufacturer is resident in the United Kingdom but is not a company, an amount (“the relevant amount”) equal to the lesser of—

(a) the amount of the manufactured dividend paid (so far as it is not otherwise deductible), and

(b) the amount of the dividend of which the manufactured dividend is representative,

shall be allowable as a deduction for the purposes of income tax only under sub-paragraph (1ZA) or (1A) below.]

[F2 (1ZA) The relevant amount shall be allowable under this sub-paragraph as a deduction for the purposes of income tax to the extent that the dividend manufacturer—

(a) receives the dividend on the equities which is represented by the manufactured dividend or receives a payment which is representative of that dividend, and

(b) is chargeable to income tax on the dividend or other payment so received;

and that deduction shall be made against the amount of the dividend or other payment so received on which the dividend manufacturer is chargeable to income tax.

(1ZB) Sub-paragraph (1ZA) above shall apply only if the amount of the dividend or other payment so received is received by the dividend manufacturer in—

(a) the year of assessment in which he pays the manufactured dividend, or

(b) the year of assessment immediately before, or immediately after, that year.]

[F3 (1A) [F4 The relevant amount shall be allowable under this sub-paragraph as a deduction for the purposes of income tax against the total income of the dividend manufacturer] to the extent that—

(a) F5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) the dividend manufacturer is treated under section 730A (repos) as receiving a payment of interest in respect of the equities and is chargeable to income tax on that payment; F6 . . .

(c) F6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(1B) Where an amount is allowable under [F8 sub-paragraph (1ZA) or (1A)] above by reference to the whole or any part of—

(a) a dividend or other payment falling within [F9 sub-paragraph (1ZA)] above [F10 , or]

(b) a payment of interest which a person is treated as receiving, as mentioned in [F11 sub-paragraph (1A) above], F12 . . .

(c) F12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(the “utilised portion” of the dividend [F13 or other payment]) no other amount shall be allowable under [F8 sub-paragraph (1ZA) or (1A)] above by reference to all or any of the utilised portion of the dividend [F13 or other payment].]

(2) F14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) F15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) The references in this paragraph to an amount being deductible are references to its being either—

(a) deductible in computing the amount of any of the dividend manufacturer’s profits or gains for the purposes of income tax F16 . . . ; or

(b) deductible for those purposes from the total income F17 . . . of the dividend manufacturer.

Textual Amendments

F1 Sch. 23A para. 2A(1) substituted (with effect in accordance with Sch. 24 para. 2(7)-(10) of the amending Act) by Finance Act 2004 (c. 12), Sch. 24 para. 2(2)

F2 Sch. 23A para. 2A(1ZA)(1ZB) inserted (with effect in accordance with Sch. 24 para. 2(7)(8)(10) of the amending Act) by Finance Act 2004 (c. 12), Sch. 24 para. 2(3)

F3 Sch. 23A para. 2A(1A)(1B) inserted (with effect in accordance with s. 108(6) of the amending Act) by Finance Act 2002 (c. 23), s. 108(3)

F4 Words in Sch. 23A para. 2A(1A) substituted (with effect in accordance with Sch. 24 para. 2(9)(10) of the amending Act) by Finance Act 2004 (c. 12), Sch. 24 para. 2(4)(a)

F5 Sch. 23A para. 2A(1A)(a) repealed (with effect in accordance with Sch. 24 para. 2(7)(8)(10) of the repealing Act) by Finance Act 2004 (c. 12), Sch. 24 para. 2(4)(b), Sch. 42 Pt. 2(16), Note 1

F6 Sch. 23A para. 2A(1A)(c) and preceding word repealed (with effect in accordance with Sch. 24 para. 2(11) of the repealing Act) by Finance Act 2004 (c. 12), Sch. 24 para. 2(4)(c), Sch. 42 Pt. 2(16), Note 2

F7 Words in Sch. 23A para. 2A(1A) repealed (with effect in accordance with Sch. 24 para. 2(11) of the repealing Act) by Finance Act 2004 (c. 12), Sch. 24 para. 2(4)(d), Sch. 42 Pt. 2(16), Note 2

F8 Words in Sch. 23A para. 2A(1B) substituted (with effect in accordance with Sch. 24 para. 2(7)-(10) of the amending Act) by Finance Act 2004 (c. 12), Sch. 24 para. 2(5)(a)

F9 Words in Sch. 23A para. 2A(1B)(a) substituted (with effect in accordance with Sch. 24 para. 2(7)(8)(10) of the amending Act) by Finance Act 2004 (c. 12), Sch. 24 para. 2(5)(b)

F10 Word at the end of Sch. 23A para. 2A(1B)(a) inserted (with effect in accordance with Sch. 24 para. 2(7)(8)(10) of the amending Act) by Finance Act 2004 (c. 12), Sch. 24 para. 2(5)(b)

F11 Words in Sch. 23A para. 2A(1B)(b) substituted (with effect in accordance with Sch. 24 para. 2(9)(10) of the amending Act) by Finance Act 2004 (c. 12), Sch. 24 para. 2(5)(c)

F12 Sch. 23A para. 2A(1B)(c) and preceding word repealed (with effect in accordance with Sch. 24 para. 2(11) of the repealing Act) by Finance Act 2004 (c. 12), Sch. 24 para. 2(5)(d), Sch. 42 Pt. 2(16), Note 2

F13 Words in Sch. 23A para. 2A(1B) substituted (with effect in accordance with Sch. 24 para. 2(11) of the amending Act) by Finance Act 2004 (c. 12), Sch. 24 para. 2(5)(e)

F14 Sch. 23A para. 2A(2) repealed (with effect in accordance with s. 24(15) of the repealing Act) by Finance (No. 2) Act 1997 (c. 58), s. 24(13), Sch. 8 Pt. 2(8), Note 1

F15 Sch. 23A para. 2A(3) repealed (with effect in accordance with s. 102(10) of the repealing Act) by Finance Act 1998 (c. 36), s. 102(8)(b), Sch. 27 Pt. 3(24), Note

F16 Words in Sch. 23A para. 2A(4)(a) repealed (22.7.2004) by Finance Act 2004 (c. 12), Sch. 24 para. 2(6)(a), Sch. 42 Pt. 2(16)

F17 Words in Sch. 23A para. 2A(4)(b) repealed (22.7.2004) by Finance Act 2004 (c. 12), Sch. 24 para. 2(6)(b), Sch. 42 Pt. 2(16)