Income Tax (Trading and Other Income) Act 2005

Chapter 3 U.K. Relevant foreign income charged on arising basis: deductions and reliefs

838 Expenses attributable to collection or payment of relevant foreign income U.K.

(1) In calculating the amount of relevant foreign income to be charged to income tax for a tax year, a deduction is allowed for expenses incurred outside the United Kingdom that are attributable to the collection or payment of the income.

(2) Subsection (1) does not apply to income charged for the tax year in accordance with section 832 (relevant foreign income charged on the remittance basis).

839 Annual payments payable out of relevant foreign income U.K.

(1) In calculating the amount of relevant foreign income to be charged to income tax for a tax year, a deduction is to be allowed for an annual payment other than interest if it meets conditions [F1 A, B1 or B2 and C] .

(2) Condition A is that the payment is payable out of the relevant foreign income.

(3) Condition [F2 B1] is that, had the payment arisen in the United Kingdom, it would have been chargeable to income tax under one of the following provisions F3 ...—

• F4 ...

• section 579 (charge to tax on royalties and other income from intellectual property),

• Chapter 4 of Part 5 (certain telecommunication rights: non-trading income), F5 ...

• Chapter 7 of Part 5 (annual payments not otherwise charged).

• [F6 , or regulation 15 of the Unauthorised Unit Trusts (Tax) Regulations 2013.]

(3A) Condition B2 is that, had the payment arisen in the United Kingdom it would have been—

(a) required to be brought into account under Part 5 of CTA 2009 (loan relationships) as a non-trading credit, or

(b) chargeable to corporation tax under [F7 Chapter 7 of Part 10 of that Act (annual payments not otherwise charged) or regulation 15 of the Unauthorised Unit Trusts (Tax) Regulations 2013] .

(4) Condition C is that the payment is made to a non-UK resident.

(5) Subsection (1) does not apply if—

(a) the relevant foreign income is received in the United Kingdom, or

(b) it is charged for the tax year in accordance with section 832 (relevant foreign income charged on remittance basis).

F8 (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F1 Words in s. 839(1) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 637(2) (with Sch. 2 Pts. 1, 2)

F2 Word in s. 839(3) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 637(3)(a) (with Sch. 2 Pts. 1, 2)

F3 Words in s. 839(3) repealed (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 637(3)(b), Sch. 3 Pt. 1 (with Sch. 2 Pts. 1, 2)

F4 Words in s. 839(3) omitted (6.4.2014) by virtue of The Unauthorised Unit Trusts (Tax) Regulations 2013 (S.I. 2013/2819), regs. 1(3), 36(9)(a)(i) (with reg. 32)

F5 Word in s. 839(3) omitted (6.4.2014) by virtue of The Unauthorised Unit Trusts (Tax) Regulations 2013 (S.I. 2013/2819), regs. 1(3), 36(9)(a)(ii) (with reg. 32)

F6 Words in s. 839(3) inserted (6.4.2014) by The Unauthorised Unit Trusts (Tax) Regulations 2013 (S.I. 2013/2819), regs. 1(3), 36(9)(b) (with reg. 32)

F7 Words in s. 839(3A)(b) substituted (6.4.2014) by The Unauthorised Unit Trusts (Tax) Regulations 2013 (S.I. 2013/2819), regs. 1(3), 36(9)(c) (with reg. 32)

F8 S. 839(6) omitted (with effect in accordance with Sch. 7 para. 81 of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 7 para. 67

840 Relief for backdated pensions charged on the arising basis U.K.

(1) This section applies if—

(a) as a result of section 575(3), 613(4) or 635(4) of ITEPA 2003 a pension or annuity or an increase in a pension or annuity is treated as relevant foreign income,

(b) the pension, annuity or increase is paid in respect of a tax year (“the earlier year”) before the tax year in which the pension, annuity or increase arose, and

(c) the income is not charged in accordance with section 832 (relevant foreign income charged on the remittance basis).

(2) If the person liable for the income tax makes a claim for relief under this section for the tax year in which the pension, annuity or increase paid in respect of the earlier year arises, that pension, annuity or increase is treated as income arising in the earlier year from a source that the person possessed in the earlier year.

(3) But subsection (2) does not affect the calculation of the full amount of the income so arising under section 575(2), 613(3) or 635(3) of ITEPA 2003 (under which the full amount of that income is to be calculated on the basis that the pension or annuity is 90% of its actual amount).

F9 (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F9 S. 840(4) omitted (with effect in accordance with Sch. 7 para. 81 of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 7 para. 68

[F10 840A Claims under section 840 U.K.

(1) A claim under section 840 must be made [F11 not more than 4 years after the end of] the tax year for which the relief is claimed.

(2) All adjustments (by way of repayment of tax, assessment or otherwise) are to be made which are necessary to give effect to section 840.

(3) Those adjustments may be made at any time, despite anything to the contrary in the Income Tax Acts.

(4) A person's personal representatives may make any claim under section 840 which the person might have made.

(5) If a person dies—

(a) any tax paid by the person and repayable because of a claim under section 840 is to be repaid to the personal representatives, and

(b) the person's personal representatives are liable for any additional tax which arises because of a claim under that section.

(6) If subsection (5)(b) applies, the additional tax—

(a) is to be assessed on the personal representatives, and

(b) is a debt due and payable out of the estate.]

Textual Amendments

F10 S. 840A inserted (with effect in accordance with Sch. 7 para. 81 of the amending Act) by Finance Act 2008 (c. 9), Sch. 7 para. 69

F11 Words in s. 840A(1) substituted (1.4.2010) by Finance Act 2008 (c. 9), s. 118(2), Sch. 39 para. 53; S.I. 2009/403, art. 2(2) (with art. 10)