Section 899 | Meaning of “qualifying annual payment”

(1)In this Chapter “qualifying annual payment” means an annual payment that meets the conditions in subsections (2) to (5).

(2)The payment must arise in the United Kingdom.

(3)If the recipient is a person other than a company, the payment must be—

(a)a payment charged to income tax under—

(i)Chapter 7 of Part 4 of ITTOIA 2005 (purchased life annuity payments),

(ii)section 579 of that Act (royalties etc from intellectual property),

(iii)Chapter 4 of Part 5 of that Act (certain telecommunication rights: non-trading income), or

(iv)Chapter 7 of Part 5 of that Act (annual payments not otherwise charged), or

(b)a payment charged to income tax under Part 9 of ITEPA 2003 because section 609 or 611 of that Act applies to it (certain employment-related annuities).

(4)If the recipient is a company, the payment must be—

(a)a payment charged to income tax as mentioned in subsection (3)(a), or

(b)a payment which is—^F1

(i)required to be brought into account under Part 5 of CTA 2009 (loan relationships) as a non-trading credit, or^F1

(ii)from a source in the United Kingdom and chargeable to corporation tax under Chapter 7 of Part 10 of that Act (annual payments not otherwise charged) or regulation 15 of the Unauthorised Unit Trusts (Tax) Regulations 2013.^F1F2

(5)The payment must not be—

(a)interest,

(b)a payment which is a qualifying payment for the purposes of Chapter 2 of Part 6 of CTA 2010 (certain payments to charity),^F3

(c)a payment which is a qualifying donation for the purposes of Chapter 2 of Part 8 (gift aid),

(d)a payment in relation to which income tax is treated as having been paid under section 494(3) (income tax treated as paid by beneficiary or settlor in relation to discretionary trust),

(e)a payment which would fall within paragraph (d) but for the fact that the trustees making the payment are non-UK resident, or

(f)an annual payment to which section 904 applies (annual payments for dividends or non-taxable consideration).