ITA 2007, ss 900, 901 impose a duty to deduct a sum representing income tax at the basic rate for the tax year of payment from 'qualifying annual payments'. Individuals are only required to deduct tax from payments made for commercial reasons. This article explains the circumstances in which tax must be deducted.
The duty to deduct tax does not apply to excepted payments by local authorities and UK companies to specified recipients, including other UK companies subject to corporation tax. See A4.460.
Meaning of 'qualifying annual payment'
A qualifying annual payment is an annual payment which arises in the UK and is taxable in the hands of the recipient under any of the provisions listed below1.
For the meaning of 'annual payment', which derives from case law, see E1.511.
If the recipient is not a company, the payment must be charged to income tax as:
- Ìý
•ÌýÌýÌýÌý a purchased life annuity (ITTOIA 2005, s 426; see E1.428)
- Ìý
•ÌýÌýÌýÌý royalties from intellectual property (ITTOIA 2005, s 579; see B5.312A)
- Ìý
•
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