Income Tax (Trading and Other Income) Act 2005 section 729

Payments for non-taxable consideration

Section 729 restricts the exemption from income tax for certain annual payments made by individuals, where the payment was made in return for consideration that does not count as taxable income of the payer.

• Where an annual payment is made under a liability incurred for consideration, and some or all of that consideration is not brought into account for the payer's income tax, the payment loses its exemption unless an additional condition is met.
• The exemption is preserved if the payment counts as income of the recipient arising on the dissolution or legal separation of a marriage or civil partnership.
• The exemption is also preserved if the payment is made to an individual who has surrendered, assigned or released an interest in settled property in favour of a person with a subsequent interest in that property.
• In Scotland, references to settled property are read as references to property held in trust.