Corporation Tax Act 2010 section 1086

Chargeable payments connected with exempt distributions

Section 1086 sets out the tax charge that applies when a chargeable payment is made within five years after an exempt distribution, including what counts as a payment and who is liable for any resulting tax.

• A chargeable payment made within five years of an exempt distribution is subject to either income tax or corporation tax on income
• Where income tax applies, the full amount or value of the payment made in the tax year is charged and treated as income
• The person receiving or entitled to the payment is liable for any income tax charged
• A "payment" includes the assumption of a liability and any other transfer of money's worth