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Relevant foreign income charged on arising basis: deductions and reliefs |
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838 | Expenses attributable to collection or payment of relevant foreign income |
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(1) | In calculating the amount of relevant foreign income to be charged to income tax for a |
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tax year, a deduction is allowed for expenses incurred outside the United Kingdom that |
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are attributable to the collection or payment of the income. |
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(2) | Subsection (1) does not apply to income charged for the tax year in accordance |
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with section 832 (relevant foreign income charged on the remittance basis). |
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839 | Annual payments payable out of relevant foreign income |
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(1) | In calculating the amount of relevant foreign income to be charged to income |
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tax for a tax year, a deduction is to be allowed for an annual payment other |
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than interest if it meets conditions A to C. |
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(2) | Condition A is that the payment is payable out of the relevant foreign income. |
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(3) | Condition B is that, had the payment arisen in the United Kingdom, it would |
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have been chargeable to income tax under one of the following provisions or |
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to corporation tax under Case III of Schedule D— |
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Chapter 10 of Part 4 (distributions from unauthorised unit trusts), |
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section 579 (charge to tax on royalties and other income from intellectual |
| |
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Chapter 4 of Part 5 (certain telecommunication rights: non-trading |
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Chapter 7 of Part 5 (annual payments not otherwise charged). |
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(4) | Condition C is that the payment is made to a non-UK resident. |
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(5) | Subsection (1) does not apply if— |
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(a) | the relevant foreign income is received in the United Kingdom, or |
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(b) | it is charged for the tax year in accordance with section 832 (relevant |
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foreign income charged on remittance basis). |
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(6) | In the case of relevant foreign income chargeable under Chapter 2 or 17 of Part |
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2 (trading income) that arises in the Republic of Ireland, this section applies |
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with the omission of condition B and subsection (5)(a). |
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840 | Relief for backdated pensions charged on the arising basis |
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(1) | This section applies if— |
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(a) | as a result of section 575(3), 613(4) or 635(4) of ITEPA 2003 a pension or |
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annuity or an increase in a pension or annuity is treated as relevant |
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(b) | the pension, annuity or increase is paid in respect of a tax year (“the |
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earlier year”) before the tax year in which the pension, annuity or |
| |
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(c) | the income is not charged in accordance with section 832 (relevant |
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foreign income charged on the remittance basis). |
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(2) | If the person liable for the income tax makes a claim for relief under this section |
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for the tax year in which the pension, annuity or increase paid in respect of the |
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earlier year arises, that pension, annuity or increase is treated as income arising |
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in the earlier year from a source that the person possessed in the earlier year. |
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(3) | But subsection (2) does not affect the calculation of the full amount of the |
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income so arising under section 575(2), 613(3) or 635(3) of ITEPA 2003 (under |
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which the full amount of that income is to be calculated on the basis that the |
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pension or annuity is 90% of its actual amount). |
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(4) | Section 837 (claims for relief on delayed remittances) applies to claims under |
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this section as it applies to claims under section 835. |
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841 | Unremittable income: introduction |
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(1) | This Chapter applies if— |
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(a) | a person is liable for income tax on income arising in a territory outside |
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(b) | the income is unremittable. |
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(2) | For the purposes of this Chapter, income is unremittable if conditions A and B |
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(3) | Condition A is that the income cannot be transferred to the United Kingdom |
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by the person who is liable for income tax in respect of the income because of— |
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(a) | the laws of the territory where the income arises, |
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(b) | executive action of its government, or |
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(c) | the impossibility of obtaining there currency that could be transferred |
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(4) | Condition B is that the person who is liable for income tax in respect of the |
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income has not realised it outside that territory for an amount in sterling or in |
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another currency which the person is not prevented from transferring to the |
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(5) | This Chapter does not apply to profits which a person is treated as receiving |
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under section 714(2) of ICTA (accrued income profits), but see section 723 of |
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that Act (which makes similar provision). |
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842 | Claim for relief for unremittable income |
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(1) | If a person liable for income tax on unremittable income makes a claim for |
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relief under this section in respect of that income, it is not taken into account |
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(2) | Subsection (1) is subject to section 843. |
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(3) | No claim under this section may be made in respect of any income so far as an |
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ECGD payment has been made in relation to it. |
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(4) | In subsection (3) “ECGD payment” means a payment made by the Export |
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Credit Guarantee Department under an agreement entered into as a result of |
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(a) | section 2 of the Export and Investment Guarantees Act 1991 (c. 67) |
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(insurance in connection with overseas investment), or |
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(b) | section 11 of the Export Guarantees and Overseas Investment Act 1978 |
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(5) | A claim under this section must be made on or before the first anniversary of |
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the normal self-assessment filing date for the tax year for which the income |
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would be charged to tax if no claim were made. |
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(1) | This section applies if— |
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(a) | a claim under section 842 has been made in relation to any income, and |
| |
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(i) | the income ceases to be unremittable, or |
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(ii) | an ECGD payment is made in relation to it. |
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(2) | In this section “ECGD payment” has the meaning given by section 842(4). |
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(3) | If income ceases to be unremittable, the income is treated as arising on the date |
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on which it ceases to be unremittable. |
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(4) | If an ECGD payment is made in relation to income, the income is treated, to the extent |
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of the payment, as arising on the date on which the ECGD payment is made. |
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(5) | The income treated as arising under subsection (3) or (4), and any tax payable |
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in respect of it under the law of the territory where it arises, are taken into |
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account for income tax purposes at their value at the date on which the income |
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(6) | Subsections (3) to (5) do not apply so far as the income has already been treated |
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as arising as a result of this section. |
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(7) | If a person who would have become liable for income tax as a result of this |
| |
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(a) | the personal representatives are liable for the tax instead, and |
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(b) | the tax is a debt due from and payable out of the estate. |
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844 | Income charged on withdrawal of relief after source ceases |
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(1) | This section applies if— |
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(a) | income is treated as arising as a result of section 843, and |
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(b) | at the time it is so treated the person who would have become liable for |
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income tax as a result of that section— |
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(i) | has permanently ceased to carry on the trade, profession, |
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vocation or property business from which the income arises, or |
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(ii) | in the case of income from another source, has ceased to possess |
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(2) | In the case of income from a trade, profession or vocation— |
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(a) | the income is treated as a post-cessation receipt for the purposes of |
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Chapter 18 of Part 2 (trading income: post-cessation receipts), but |
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|
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(b) | in the application of that Chapter to that income, section 243 (extent of |
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charge to tax) is omitted. |
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(3) | In the case of income from a property business— |
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(a) | the income is treated as a post-cessation receipt from a UK property |
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business for the purposes of Chapter 10 of Part 3 (property income: |
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post-cessation receipts), but |
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(b) | in the application of that Chapter to that income, section 350 (extent of |
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charge to tax) is omitted. |
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(4) | In the case of income from another source, the income is taxed as if the person |
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continued to possess that source. |
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845 | Valuing unremittable income |
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(1) | If no claim is made under section 842 in relation to unremittable income arising |
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in a territory outside the United Kingdom, the amount of the income to be |
| |
taken into account for income tax purposes is determined as follows. |
| |
(2) | If the currency in which the income is denominated has a generally recognised |
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market value in the United Kingdom, the amount is determined by reference |
| |
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(3) | In any other case, the amount is determined according to the official rate of |
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exchange of the territory where the income arises. |
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This Part contains some special rules about partnerships. |
| |
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(1) | In this Act persons carrying on a trade in partnership are referred to |
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collectively as a “firm”. |
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(2) | The provisions of this Part are expressed to apply to trades but unless |
| |
otherwise indicated (whether expressly or by implication) also apply— |
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(b) | in the case of this section and sections 849, 850, 857 and 858 to |
| |
businesses that are not trades or professions. |
| |
(3) | In those sections as applied by subsection (2)(b)— |
| |
(a) | references to a trade are references to a business, and |
| |
(b) | references to the profits of a trade are references to the income arising |
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