M1(1)Any payment to which this subsection applies shall be made without deduction of [F2income tax and] shall not be allowed as a deduction in computing the income or total income of the person by whom it is made F3. . . .
(2)Subject to the following provisions of this section, subsection (1) above applies to any payment which—
[F4(a)is not interest but is—
(i)an annuity or other annual payment charged with income tax under Part 5 of ITTOIA 2005 otherwise than as relevant foreign income; or
(ii)an annuity or other annual payment charged with corporation tax under Case III of Schedule D; and]
[F5(b)is made under a liability incurred for consideration in money or money's worth all or any of which—
(i)consists of, or of the right to receive, a dividend, or
(ii)is not required to be brought into account in computing for the purposes of income tax or corporation tax the income of the person making the payment.]
(3)Subsection (1) above does not apply to—
(a)any payment which in the hands of the recipient is income falling within [F6section 627(1) or (2)(a) of ITTOIA 2005];
(b)any payment made to an individual under a liability incurred in consideration of his surrendering, assigning or releasing an interest in settled property to or in favour of a person having a subsequent interest;
(c)any annuity granted in the ordinary course of a business of granting annuities; or
(d)any annuity charged on an interest in settled property and granted at any time before 30th March 1977 by an individual to a company whose business at that time consisted wholly or mainly in the acquisition of interests in settled property or which was at that time carrying on life assurance business in the United Kingdom.
(4)In the application of this section to Scotland the references in subsection (3) above to settled property shall be construed as references to property held in trust.
(5)Subsection (1) above applies to a payment made after 5th April 1988 irrespective of when the liability to make it was incurred.
Textual Amendments
F1S. 125 title substituted (retrospective to 2.12.2004) by virtue of Finance Act 2005 (c. 7), s. 91(3)
F2Words in s. 125(1) substituted (with effect in accordance with s. 38(7)(13) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), s. 38(3)
F3Words in s. 125(1) repealed (with effect in accordance with s. 38(7)(13) of the repealing Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 11 Pt. 2(7), Note
F4S. 125(2)(a) and word substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 107(2) (with Sch. 2)
F5S. 125(2)(b) substituted (with retrospective effect in accordance with s. 91(7) of the amending Act) by Finance Act 2005 (c. 7), s. 91(2)
F6Words in s. 125(3)(a) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 107(3) (with Sch. 2)
Modifications etc. (not altering text)
C1 See 1989 s.59—rights of admission disregarded in the case of certain covenanted subscriptions.
Marginal Citations
M1Source—1977 s.48