Income Tax Act 2007 section 904

Annual payments for dividends or non-taxable consideration

Section 904 defines when an annual payment made in return for dividends or non-taxable consideration is excluded from the normal obligation to deduct income tax at source, and sets out the exceptions where the obligation to deduct still applies.

• An annual payment made in return for a dividend (or the right to receive one), or for consideration that is not taxable, is generally excluded from the duty to deduct income tax at source under the annual payments rules.
• The payment must be one that is charged to income tax as miscellaneous income, or one that falls within the corporation tax loan relationships or annual payments rules, or is taxable under the Unauthorised Unit Trusts (Tax) Regulations 2013.
• Certain payments are excepted from this exclusion and remain subject to the deduction rules — including payments under divorce or separation settlements payable to the other party, payments made by an individual for genuine commercial reasons connected with their trade or profession, payments made in return for surrendering an interest in settled property, and annuities granted in the ordinary course of an annuity business.
• In Scotland, references to settled property are read as references to property held in trust.