Income Tax Act 2007 section 928

Chargeable payments connected with exempt distributions

Section 928 requires income tax to be deducted at source from certain chargeable payments made within five years of an exempt distribution such as a qualifying demerger.

• When a company makes a chargeable payment connected with an exempt distribution (e.g. a demerger), the payer must deduct income tax at the basic rate from the payment at the time it is made.
• An exception from this withholding obligation exists for payments between companies, as set out in Chapter 11 of the Act.
• Collection of the tax deducted is governed by Chapter 15 where the payer is a UK resident company, or by Chapter 16 in all other cases.
• The term "payment" for these purposes covers only actual cash payments and does not extend to transfers of money's worth that are treated as payments under sections 1086 to 1090 of CTA 2010.