Income Tax (Trading and Other Income) Act 2005

Chapter 1 U.K. Introduction

574 Overview of Part 5 U.K.

(1) This Part imposes charges to income tax under—

(a) Chapter 2 (receipts from intellectual property),

[F1 (aa) Chapter 2A (offshore receipts in respect of intangible property),]

(b) Chapter 3 (films and sound recordings: non-trade businesses),

(c) Chapter 4 (certain telecommunication rights: non-trading income),

(d) Chapter 5 (settlements: amounts treated as income of settlor),

(e) Chapter 6 (beneficiaries' income from estates in administration),

(f) Chapter 7 (annual payments not otherwise charged), and

(g) Chapter 8 (income not otherwise charged).

(2) Part 6 deals with exemptions from the charges under this Part [F2 (but see section 608X)].

(3) See, in particular, any exemptions mentioned in the Chapters of this Part.

(4) The charges under this Part apply to non-UK residents as well as UK residents but this is subject to section 577(2) (charges on non-UK residents only on UK source income).

(5) This section needs to be read with the relevant priority rules (see sections 2, 575 and 576).

Textual Amendments

F1 S. 574(1)(aa) inserted (with effect in accordance with Sch. 3 para. 7 of the amending Act) by Finance Act 2019 (c. 1), Sch. 3 para. 2(2)

F2 Words in s. 574(2) inserted (with effect in accordance with Sch. 3 para. 7 of the amending Act) by Finance Act 2019 (c. 1), Sch. 3 para. 2(3)

575 Provisions which must be given priority over Part 5 U.K.

(1) Any income, so far as it falls within—

(a) any Chapter of this Part, and

(b) Chapter 2 of Part 2 (receipts of a trade, profession or vocation),

is dealt with under Part 2.

(2) Any income, so far as it falls within—

(a) any Chapter of this Part, and

(b) Chapter 3 of Part 3 so far as the Chapter relates to a UK property business,

is dealt with under Part 3.

(3) Any income, so far as it falls within—

(a) any Chapter of this Part, and

(b) Chapter 2 or 3 of Part 4 (interest and dividends etc. from UK resident companies etc.),

is dealt with under the relevant Chapter of Part 4.

(4) Any income, so far as it falls within—

(a) any Chapter of this Part, and

(b) Part 2, 9 or 10 of ITEPA 2003 (employment income, pension income or social security income),

is dealt with under the relevant Part of ITEPA 2003.

576 Priority between Chapters within Part 5 U.K.

[F3 (1) Any income, so far as it falls within Chapter 2 (receipts from intellectual property) and Chapter 2A (offshore receipts in respect of intangible property), is dealt with under Chapter 2.]

[F4 (2)] Any income, so far as it falls within Chapter 2 (receipts from intellectual property) and Chapter 3 (films and sound recordings: non-trade businesses), is dealt with under Chapter 3.

Textual Amendments

F3 S. 576(1) inserted (with effect in accordance with Sch. 3 para. 7 of the amending Act) by Finance Act 2019 (c. 1), Sch. 3 para. 3(3)

F4 S. 576(2): s. 576 renumbered as s. 576(2) (with effect in accordance with Sch. 3 para. 7 of the amending Act) by Finance Act 2019 (c. 1), Sch. 3 para. 3(2)

577 Territorial scope of Part 5 charges U.K.

(1) Income arising to a UK resident is chargeable to tax under this Part whether or not it is from a source in the United Kingdom.

(2) Income arising to a non-UK resident is chargeable to tax under this Part only if it is from a source in the United Kingdom.

[F5 (2A) If income arising to an individual who is UK resident arises in the overseas part of a split year, it is to be treated for the purposes of this section as arising to a non-UK resident.]

(3) References in this section to income which is from a source in the United Kingdom include, in the case of any income which does not have a source, references to income which has a comparable connection to the United Kingdom.

(4) This section is subject to any express or implied provision to the contrary in this Part (or elsewhere in the Income Tax Acts).

[F6 (5) See also section 577A (territorial scope of Part 5 charges: receipts from intellectual property).]

Textual Amendments

F5 S. 577(2A) inserted (with effect in accordance with Sch. 45 para. 153(2) of the amending Act) by Finance Act 2013 (c. 29), Sch. 45 para. 89

F6 S. 577(5) inserted (with effect in accordance with s. 42(3) of the amending Act) by Finance Act 2016 (c. 24), s. 42(1)

[F7 577A Territorial scope of Part 5 charges: receipts from intellectual property U.K.

(1) References in section 577 to income which is from a source in the United Kingdom include income arising where—

(a) a royalty or other sum is paid in respect of intellectual property by a person who is non-UK resident, and

(b) the payment is made in connection with a trade carried on by that person through a permanent establishment in the United Kingdom.

(2) Subsection (3) applies where a royalty or other sum is paid in respect of intellectual property by a person who is non-UK resident in connection with a trade carried on by that person only in part through a permanent establishment in the United Kingdom.

(3) The payment referred to in subsection (2) is to be regarded for the purposes of subsection (1)(b) as made in connection with a trade carried on through a permanent establishment in the United Kingdom to such extent as is just and reasonable, having regard to all the circumstances.

(4) In determining for the purposes of section 577 whether income arising is from a source in the United Kingdom, no regard is to be had to arrangements the main purpose of which, or one of the main purposes of which, is to avoid the effect of the rule in subsection (1).

(5) In this section—

• “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable);

• “intellectual property” has the same meaning as in section 579;

• “permanent establishment”—

  (a)

  in relation to a company, is to be read (by virtue of section 1007A of ITA 2007) in accordance with Chapter 2 of Part 24 of CTA 2010, and

  (b)

  in relation to any other person, is to be read in accordance with that Chapter but as if references in that Chapter to a company were references to that person.]

Textual Amendments

F7 S. 577A inserted (with effect in accordance with s. 42(3) of the amending Act) by Finance Act 2016 (c. 24), s. 42(2) (with s. 42(4)(5))