PART IV PROVISIONS RELATING TO THE SCHEDULE D CHARGE

CHAPTER VIII MISCELLANEOUS AND SUPPLEMENTAL

125F1Annual payments for dividends or non-taxable consideration

M1C11

Any payment to which this subsection applies F6. . . shall not be allowed as a deduction in computing the income F7of the company by which it is made F5. . . .

2

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

F3a

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

F2b

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 F8. . . 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 F4section 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.