Income Tax Act 2007 section 906

Certain royalties etc. where usual place of abode of owner is abroad

Section 906 requires income tax to be deducted at source from certain royalty and intellectual property payments made to owners or assignors whose usual place of abode is outside the United Kingdom.

• When a royalty or other payment is made for the use of intellectual property and the owner normally lives outside the UK, the payer must deduct income tax at the basic rate before making the payment.
• The same deduction requirement applies where intellectual property has been assigned but periodic payments are still made to a former owner (the assignor) whose usual place of abode is outside the UK.
• In both cases, the payment must be one that is charged to income tax or corporation tax; and the obligation does not apply to payments for copies of works or articles that have been exported from the UK for distribution abroad.
• Exceptions and special rules may apply under double taxation arrangements, rules for EU companies paying gross, and provisions allowing payments between companies without deduction.