Income Tax (Trading and Other Income) Act 2005 section 839

Annual payments payable out of relevant foreign income

Section 839 sets out the conditions under which a deduction may be claimed for annual payments (other than interest) made out of relevant foreign income to non-UK residents.

• A deduction is allowed when calculating taxable relevant foreign income for annual payments (excluding interest) that meet conditions A, B1 or B2, and C
• The payment must be payable out of the relevant foreign income (condition A), and must be of a type that would have been taxable in the UK had it arisen here (condition B1 or B2), and must be made to a non-UK resident (condition C)
• Condition B1 covers payments that would have been chargeable to income tax under specified provisions, while condition B2 covers payments that would have been brought into account under corporation tax loan relationship rules or charged to corporation tax on annual payments
• The deduction is not available if the relevant foreign income is received in the UK or is taxed on the remittance basis under section 832