Section 51A | General rule. ^F1

(1)A payment to which this section applies shall not be a charge on the income of the person liable to make it, and accordingly—

(a)his income shall be computed without any deduction being made on account of the payment, and

(b)the payment shall not form part of the income of the person to whom it is made or of any other person.

(2)This section applies to any annual payment made by an individual which would otherwise be within the charge to tax under Case III of Schedule D except—

(a)a payment of interest;

(b)a covenanted payment to charity (within the meaning given by section 434(2) below);

(c)a payment made for bona fide commercial reasons in connection with the individual’s trade, profession or vocation; and

(d)a payment to which section 48(1) of the Finance Act 1977 applies.

(3)This section applies to a payment made by personal representatives (within the meaning given in section 432(4) below) where—

(a)the deceased would have been liable to make the payment if he had not died, and

(b)this section would have applied to the payment if he had made it.

(4)A maintenance payment arising outside the United Kingdom shall not be within the charge to tax under Case V of Schedule D if, because of this section, it would not have been within the charge to tax under Case III had it arisen in the United Kingdom; and for this purpose “maintenance payment” means a periodical payment (not being an instalment of a lump sum) which satisfies the conditions set out in paragraphs (a) and (b) of section 5IB(5) below.

(5)No deduction shall be made under section 122(1)(b) below on account of an annuity or other annual payment which would not have been within the charge to tax under Case III of Schedule D if it had arisen in the United Kingdom.

(6)References in subsection (2) above to an individual include references to a Scottish partnership in which at least one partner is an individual.