INTM342520 - DT applications and
claims - Types of income: Royalties
UK income tax is deducted from copyright royalties under
ICTA88/S536. These provisions are subject to the following
the type of payment. There may be no doubt that
the payment is a royalty but it could be outside the scope of S536
- for example, if payable to a professional author see
INTM342590. Whether or not a payment
falls within the scope of S536 is for the UK Inspector who is
responsible for the payer of the income to decide.
where the recipient of the royalties lives.
Royalty payments fall under S536 if the copyright owner has his
usual place of abode outside the UK. S536 does not use the words
"not resident in the UK" so even though tax is deducted/deductible
you cannot make the assumption that the claimant is not resident in
the UK. Whether the recipient of a royalty has a "usual place of
abode" outside the UK for the purposes of S536 is a question for
the Inspector of Taxes for the payer of the royalties to decide.
the source of the income. If the copyright is
exploited in the UK the royalty payment will be regarded as having
a UK source and therefore within the provisions of S536. This is
irrespective of the law governing the contract.
NOTE: you must not give a ruling on any of the above three
points. Responsibility for deciding if any payment is within the
charge to tax lies with the Inspector of Taxes who is responsible
for the Corporation Tax affairs of the UK payer of the
If you have a case where there is something which prevents
you from giving relief under the Double Taxation Agreement (DTA)
you should submit the file to Technical Advice Group.