Income Tax Act 2007 section 902

Meaning of "applicable rate" in section 901

Section 902 defines the "applicable rate" of tax that must be deducted at source from certain payments under section 901, establishing which rate applies depending on the type of payment and who makes it.

• Most payments subject to deduction at source are taxed at the basic rate of income tax.
• Annual payments made by persons other than individuals are also normally subject to deduction at the basic rate, except for certain purchased life annuity payments, which use the savings rate instead.
• Special provision is made where the recipient is a company within the charge to corporation tax, and separate rules in Chapter 8 or under double taxation relief regulations may require or permit deduction at a different rate.
• The applicable rate is always determined by reference to the tax year in which the payment is actually made.