Section 1301 — Corporation Tax Act 2009: Restriction of deductions for annual payments

Restriction of deductions for annual payments 1301 1 In calculating a company's income from any source, no deduction is allowed for an annual payment which meets the conditions in subsections (2) to (6).

2 The payment must be a payment charged to—

a income tax under Part 5 of ITTOIA 2005 otherwise than as relevant foreign income, or b corporation tax under Chapter 7 of Part 10 (annual payments not otherwise charged).

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, or of the right to receive, a dividend, or b is not required to be brought into account in calculating for corporation tax purposes the income of the company 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 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.

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

7 In subsection (2) “ relevant foreign income ” has the same meaning as in the Income Tax Acts (see section 989 of ITA 2007).

8 In the application of this section to Scotland the reference in subsection (5) to settled property is to be read as a reference to property held in trust.