Income Tax (Trading and Other Income) Act 2005

Chapter 3U.K.Relevant foreign income charged on arising basis: deductions and reliefs

838Expenses attributable to collection or payment of relevant foreign incomeU.K.

(1)In calculating the amount of relevant foreign income to be charged to income tax for a tax year, a deduction is allowed for expenses incurred outside the United Kingdom that are attributable to the collection or payment of the income.

(2)Subsection (1) does not apply to income charged for the tax year in accordance with section 832 (relevant foreign income charged on the remittance basis).

839Annual payments payable out of relevant foreign incomeU.K.

(1)In calculating the amount of relevant foreign income to be charged to income tax for a tax year, a deduction is to be allowed for an annual payment other than interest if it meets conditions [F1A, B1 or B2 and C] .

(2)Condition A is that the payment is payable out of the relevant foreign income.

(3)Condition [F2B1] is that, had the payment arisen in the United Kingdom, it would have been chargeable to income tax under one of the following provisions F3...—

• Chapter 10 of Part 4 (distributions from unauthorised unit trusts),

• section 579 (charge to tax on royalties and other income from intellectual property),

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

• Chapter 7 of Part 5 (annual payments not otherwise charged).

[F4(3A)Condition B2 is that, had the payment arisen in the United Kingdom it would have been—

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

(b)chargeable to corporation tax under Chapter 5 of Part 10 of that Act (distributions from unauthorised unit trusts) or Chapter 7 of that Part (annual payments not otherwise charged).]

(4)Condition C is that the payment is made to a non-UK resident.

(5)Subsection (1) does not apply if—

(a)the relevant foreign income is received in the United Kingdom, or

(b)it is charged for the tax year in accordance with section 832 (relevant foreign income charged on remittance basis).

F5(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

840Relief for backdated pensions charged on the arising basisU.K.

(1)This section applies if—

(a)as a result of section 575(3), 613(4) or 635(4) of ITEPA 2003 a pension or annuity or an increase in a pension or annuity is treated as relevant foreign income,

(b)the pension, annuity or increase is paid in respect of a tax year (“the earlier year”) before the tax year in which the pension, annuity or increase arose, and

(c)the income is not charged in accordance with section 832 (relevant foreign income charged on the remittance basis).

(2)If the person liable for the income tax makes a claim for relief under this section for the tax year in which the pension, annuity or increase paid in respect of the earlier year arises, that pension, annuity or increase is treated as income arising in the earlier year from a source that the person possessed in the earlier year.

(3)But subsection (2) does not affect the calculation of the full amount of the income so arising under section 575(2), 613(3) or 635(3) of ITEPA 2003 (under which the full amount of that income is to be calculated on the basis that the pension or annuity is 90% of its actual amount).

F6(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F7840AClaims under section 840U.K.

(1)A claim under section 840 must be made on or before the fifth anniversary of the normal self-assessment filing date for the tax year for which the relief is claimed.

(2)All adjustments (by way of repayment of tax, assessment or otherwise) are to be made which are necessary to give effect to section 840.

(3)Those adjustments may be made at any time, despite anything to the contrary in the Income Tax Acts.

(4)A person's personal representatives may make any claim under section 840 which the person might have made.

(5)If a person dies—

(a)any tax paid by the person and repayable because of a claim under section 840 is to be repaid to the personal representatives, and

(b)the person's personal representatives are liable for any additional tax which arises because of a claim under that section.

(6)If subsection (5)(b) applies, the additional tax—

(a)is to be assessed on the personal representatives, and

(b)is a debt due and payable out of the estate.]