Income and Corporation Taxes Act 1988

348 Payments out of profits or gains brought into charge to income tax: deduction of tax. U.K.

(1) M1 Subject to any provision to the contrary in the Income Tax Acts, where any annuity or other annual payment charged with tax under Case III of Schedule D, not being interest, is payable wholly out of profits or gains brought into charge to income tax—

(a) the whole of the profits or gains shall be assessed and charged with income tax on the person liable to the annuity or other annual payment, without distinguishing the annuity or other annual payment; and

(b) the person liable to make the payment, whether out of the profits or gains charged with income tax or out of any annual payment liable to deduction, or from which a deduction has been made, shall be entitled on making the payment to deduct and retain out of it a sum representing the amount of income tax thereon; and

(c) the person to whom the payment is made shall allow the deduction on receipt of the residue of the payment, and the person making the deduction shall be acquitted and discharged of so much money as is represented by the deduction, as if that sum had been actually paid; and

(d) the deduction shall be treated as income tax paid by the person to whom the payment is made.

(2) Subject to any provision to the contrary in the Income Tax Acts, where—

(a) any royalty or other sum paid in respect of the user of a patent; F1 . . .

(b) F1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

is paid wholly out of profits or gains brought into charge to income tax, the person making the payment shall be entitled on making the payment to deduct and retain out of it a sum representing the amount of the income tax thereon.

(3) M2 This section does not apply toa small maintenance payment within the meaning of section 351or toF2 any payment to which section 687 applies [F3 or to any payment which is a relevant payment for the purposes of Chapter VIIA of Part IV].

Textual Amendments

F1 S. 348(2)(b) and preceding word repealed (with effect in accordance with Sch. 18 Pt. 6(2) Note of the repealing Act) by Finance Act 1997 (c. 16), Sch. 18 Pt. 6(2)

F2 Words repealed by 1988(F) Sch.14 Part IV—in respect of payments made on or after 6April 1989.

F3 Words in s. 348(3) inserted (29.4.1996) by Finance Act 1996 (c. 8), Sch. 29 para. 5(1)

Modifications etc. (not altering text)

C1 See also1970(M) s.90—interest on unpaid tax.1970(M) s.106—avoidance of agreements for payment without deduction of tax.1989 s.94and Sch.11 para.18—deep gain securities.S.I. 1970 No.448 (in Part III Vol.5) regns. 2-11—procedure for payment without deduction of tax of income exempt under double taxation arrangements.

Marginal Citations

M1 Source-1970 s.52; 1971 Sch.6 20(c); 1973 s.17(1)

M2 Source-1970 s.65(2)