Income Tax (Trading and Other Income) Act 2005 section 727

Certain annual payments by individuals

Section 727 (together with section 730) provides exemptions for certain annual payments made by individuals and for foreign maintenance payments, but Schedule 2 paragraph 146 restricts these exemptions by excluding payments that fell due before 16 March 1988 or payments due between that date and 5 April 2000 that were made under pre-existing obligations, unless specific conditions are met.

• The exemptions under sections 727 and 730 do not apply to any payment falling due before 16 March 1988
• Payments due from 16 March 1988 to 5 April 2000 made under pre-existing obligations (as defined in section 36(3) of the Finance Act 1988) are also excluded from the exemptions, unless one of five conditions (A to E) is satisfied
• The five conditions cover situations such as where the payment is treated as the payer's income under settlement rules, where the payment was between spouses living together after 5 April 1990, where an election was made under section 39 of the Finance Act 1988, or where the payment relates to the maintenance or education of a person who reached age 21 within specified timeframes
• If any one of conditions A to E is met, the payment escapes the restriction and the exemptions under sections 727 and 730 can apply