CTM34250 | Residence: non-resident companies: ‘charges received’: income from which income tax has been deducted

If a non-UK resident company within the charge to Corporation Tax receives what used to be called a ‘charge’ on income (income comprising annual payments from which Income Tax has been deducted by the payer - see CTM09005 and PIM4810), the gross payment is treated as income in its hands and is chargeable to Corporation Tax and not to Income Tax so far as it falls within the chargeable profits of the company (CTM34210). The rules governing set-off of any Income Tax borne against the Corporation Tax liability are at CTA10/S968. ‘Taxed income’ in this context might include, for example, patent royalties received by a manufacturing concern, or interest on the reserve fund investments of the UK branch of a foreign bank, or rental income from UK property to which the Non-resident Landlord Scheme applies..

A ‘charge’ received by a non-UK resident company which does not fall within the previous paragraph will, subject to the provisions of any relevant Double Taxation Agreement, be within the charge to Income Tax, so far as it arises in the UK.