BIM42605 - Specific deductions: annuities and annual payments: government departments

Where a payment of royalties etc within ICTA88/S55 (1) or ICTA88/S120 or any other annual payment is made without deduction of tax to a government department:

1. by a company, see the guidance in CTM09000 onwards for relief under the charges regime.

Note that FA02 amended ICTA88/S349A and ICTA88/S349B. Payments made by companies and local authorities (and partnerships where at least one member is a company or local authority) on or after 1 October 2002 coming within ICTA88/S349 (1) or ICTA88/S349 (2) may be made gross where the payer reasonably believes that the payee is within one of the categories under ICTA88/S349B. One of the new categories of recipient within ICTA88/S349B as amended by FA02/S94 is a department of the Crown. For further guidance see CTM40880 (local authorities) and CTM35215 (companies).

2. exceptionally, by an individual, where required to do so under ICTA88/349 (1) due to the payments being made out of profits not wholly subject to income tax, contact CT&VAT (Technical) for guidance.

For rent etc. from electric line wayleaves within ICTA88/S120 paid before 6 April 1997 act as above. For payments made after that date the requirement to deduct income tax was removed by FA97/SCH18.

For payments of amounts within ICTA88/S120 made on or after 6 April 1997:

• by a company, see CTM09020,
• by anyone else, ICTA88/S74 (1)(q) no longer applies to payments within ICTA88/S120 and relief can normally be given as a deduction unless exceptionally the payment is an annual payment (ICTA88/S74 (1)(m)).