Income Tax Act 2007 section 451

Special rule for persons affected by section 733 of ICTA

Section 451 restricts the relief available for annual payments where a person's income includes interest that has been brought into charge to income tax under the anti-avoidance rules in section 733 of ICTA (now rewritten), which target certain securities transactions.

• The anti-avoidance rules in sections 731 to 735 of ICTA apply where a person buys securities, becomes entitled to receive interest on them, and subsequently sells them — the rules cancel what would otherwise be an exemption from tax on that interest.
• Where the interest (called "affected income") is brought into charge because the exemption is cancelled, any annual payment made in the same tax year cannot be treated as paid out of that interest.
• Relief for the annual payment is only available if, and to the extent that, the person has sufficient "non-affected income" — calculated as modified net income minus the affected income — to cover the annual payment.
• Because this rule relates to a very specific type of income, it takes priority and must be applied before other provisions that would otherwise determine how relief for annual payments is given.