Section 904 — Income Tax Act 2007: Annual payments for dividends or non-taxable consideration

Annual payments for dividends or non-taxable consideration 904 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—

a a payment charged to income tax under Part 5 of ITTOIA 2005 (miscellaneous income), or b a payment which is—

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

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.