Part 15Deduction of income tax at source
Chapter 6Deduction from annual payments and patent royalties
Introduction
898Overview of Chapter
1
This Chapter deals with the deduction of sums representing income tax from—
a
qualifying annual payments, and
b
royalties or other sums paid in respect of the use of patents.
2
See also—
a
Chapter 11 (payments between companies etc) for an exception from the duties to deduct sums representing income tax under this Chapter,
b
Chapter 4 of Part 8, which gives relief for certain payments from which sums representing income tax must be deducted under this Chapter, and
c
section 615(3) of ICTA (exemption from tax in respect of certain pensions) which contains a further exception from the duties to deduct sums representing income tax under this Chapter.
3
If a payment to which a provision of this Chapter applies is also one to which section 906 applies, it is treated as not being a payment to which a provision of this Chapter applies.
899Meaning of “qualifying annual payment”
1
In this Chapter “qualifying annual payment” means an annual payment that meets the conditions in subsections (2) to (5).
2
The payment must arise in the United Kingdom.
3
If the recipient is a person other than a company, the payment must be—
a
a payment charged to income tax under—
i
Chapter 7 of Part 4 of ITTOIA 2005 (purchased life annuity payments),
ii
section 579 of that Act (royalties etc from intellectual property),
iii
Chapter 4 of Part 5 of that Act (certain telecommunication rights: non-trading income), or
iv
Chapter 7 of Part 5 of that Act (annual payments not otherwise charged), or
b
a payment charged to income tax under Part 9 of ITEPA 2003 because section 609 or 611 of that Act applies to it (certain employment-related annuities).
4
If the recipient is a company, the payment must be—
a
a payment charged to income tax as mentioned in subsection (3)(a), or
b
a payment charged to corporation tax under Case III of Schedule D.
5
The payment must not be—
a
interest,
b
a qualifying donation as defined in section 339 of ICTA (donations to charity by companies),
c
a payment which is a qualifying donation for the purposes of Chapter 2 of Part 8 (gift aid),
d
a payment in relation to which income tax is treated as having been paid under section 494(3) (income tax treated as paid by beneficiary or settlor in relation to discretionary trust),
e
a payment which would fall within paragraph (d) but for the fact that the trustees making the payment are non-UK resident, or
f
an annual payment to which section 904 applies (annual payments for dividends or non-taxable consideration).