Part 11Manufactured payments and repos
Chapter 2Manufactured payments
Manufactured dividends on UK shares
574Allowable deductions: matching
1
This section applies if a person who pays a manufactured dividend as mentioned in section 573(1) is UK resident and is not a company.
2
An amount equal to the lesser of—
a
the amount of the manufactured dividend, and
b
the amount of the dividend of which the manufactured dividend is representative,
is allowable as a deduction for income tax purposes, subject to subsection (3).
3
It is allowable only so far as—
a
it is not otherwise deductible, and
b
it falls within subsection (4) or (7).
4
An amount falls within this subsection so far as the payer—
a
receives either the dividend which is represented by the manufactured dividend or a payment which is representative of that dividend, and
b
is chargeable to income tax on the dividend or payment received.
5
An amount falls within subsection (4) only if the amount of the dividend or payment received is received by the payer in—
a
the tax year in which the payer pays the manufactured dividend, or
b
the tax year immediately before, or immediately after, that year.
6
An amount which falls within subsection (4) is allowable as a deduction only from the amount of the dividend or payment received on which the payer is chargeable to income tax.
7
An amount falls within this subsection so far as the payer—
a
is treated under section 607 (treatment of price differences under repos) as receiving a payment of interest in respect of the shares, and
b
is chargeable to income tax on the payment.
8
An amount which falls within subsection (7) is allowable as a deduction in calculating the net income of the payer (see Step 2 of the calculation in section 23).
9
See section 575 for a further qualification to the rule in subsection (2).
10
For the purposes of subsection (3)(a) an amount is deductible if it is—
a
deductible in calculating any of the payer's profits or gains for income tax purposes, or
b
deductible for those purposes in calculating the net income of the payer.