E1.510 Charge to income tax on annual payments received
A charge to income tax is provided on 'annual payments' received by ITTOIA 2005, Pt V, Ch 7, ss 683–686. The charge to tax on the recipient is considered here.
The Act also provides certain exemptions from the charge in Pt VI, Ch 8, ss 727–748. The exemptions cover such items as personal injury compensation and damages, health and employment insurance and payments to adopters and guardians, see E1.551.
What is an annual payment?
The term annual payment is not defined in the legislation, but it must be payable under a legal obligation extending for more than one year, be income, rather than capital, in the hands of the recipient (though not necessarily in the hands of the payer), and represent pure income profit, i.e. the recipient does nothing to earn it. For the precise meaning of the term, it is necessary to look at the extensive case law on the issue, see E1.511.
The payer of an annual payment
Historically, annual
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