Annual payments and patent royalties

A4.431 General

Introduction

ITA 2007 and CTA 2010 overhauled the tax regime for the deduction of tax at source on those payments previously categorised as payments of 'charges on income'. The term 'charges on income' is an archaic one which is not anywhere defined in the income tax legislation. However, HMRC defined them as 'sums which a person is under a legal obligation to pay, and from which the tax law allows or requires him to deduct basic rate tax on payment'.

The payments that most commonly fell within that definition of charges on income

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