Section 904 | Annual payments for dividends or non-taxable consideration

(1)For the purposes of section 899(5)(f) and 903(2)(b) this section applies to an annual payment which meets the conditions in subsections (2) to (7).

(2)The payment must be—^F1

(a)a payment charged to income tax under Part 5 of ITTOIA 2005 (miscellaneous income), or^F1

(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

(3)The payment must be made under a liability incurred for consideration in money or money's worth all or any of which—

(a)consists of a dividend or the right to receive a dividend, or

(b)is not required to be brought into account in calculating for the purposes of income tax or corporation tax the income of the person making the payment.

(4)The payment must not be a payment of income—

(a)which arises under a settlement made by one party to a marriage or civil partnership by way of provision for the other—

(i)after the dissolution or annulment of the marriage or civil partnership, or

(ii)while they are separated under an order of a court, or under a separation agreement, or if the separation is likely to be permanent, and

(b)which is payable to, or applicable for the benefit of, the other party.

(5)The payment must not be made by an individual for genuine commercial reasons in connection with the individual's trade, profession or vocation.

(6)The payment must not be made to an individual under a liability incurred at any time in consideration of the individual surrendering, assigning or releasing an interest in settled property to or in favour of a person with a subsequent interest.

(7)The payment must not be a payment of an annuity granted in the ordinary course of a business of granting annuities.

(8)In the application of this section to Scotland the reference in subsection (6) to settled property is to be read as a reference to property held in trust.