Income and Corporation Taxes Act 1988

125 [F1 Annual payments for dividends or non-taxable consideration] U.K.

M1 (1) Any payment to which this subsection applies F2 . . . shall not be allowed as a deduction in computing the income [F3 of the company by which] it is made F4 . . . .

(2) Subject to the following provisions of this section, subsection (1) above applies to any payment which—

[F5 (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]

[F6 (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 F7 . . . 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 [F8 section 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;[F9 or]

(c) any annuity granted in the ordinary course of a business of granting annuities;F10 . . .

(d) F10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(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

F1 S. 125 title substituted (retrospective to 2.12.2004) by virtue of Finance Act 2005 (c. 7), s. 91(3)

F2 Words in s. 125(1) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 21(2)(a), Sch. 3 Pt. 1 (with Sch. 2)

F3 Words in s. 125(1) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 21(2)(b) (with Sch. 2)

F4 Words in s. 125(1) repealed (with effect in accordance with s. 38(7)(13) of the repealing Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 11 Pt. 2(7), Note

F5 S. 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)

F6 S. 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)

F7 Words in s. 125(2)(b) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 21(3), Sch. 3 Pt. 1 (with Sch. 2)

F8 Words 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)

F9 Word in s. 125(3) inserted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 21(4)(a) (with Sch. 2)

F10 S. 125(3)(d) and preceding word repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 21(4)(b), Sch. 3 Pt. 1 (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

M1 Source—1977 s.48