Income Tax (Trading and Other Income) Act 2005 section 602

Payments received after deduction of tax

Section 602 explains how income tax deducted at source from royalty payments and other intellectual property income is credited to the recipient for tax purposes.

• When royalties or other intellectual property income are paid after deduction of income tax at source, the tax deducted is treated as income tax already paid by the recipient
• This applies to deductions made from annual payments and patent royalties under Chapter 6 of Part 15 of the Income Tax Act 2007
• It also applies to deductions made from other payments connected with intellectual property under Chapter 7 of Part 15 of the Income Tax Act 2007
• The recipient can set the tax deducted against their overall income tax liability, potentially resulting in a repayment if too much has been withheld