SAIM8020 - Annual payments: meaning of annual payment

Characteristics of an annual payment

The phrase 바카라 사이트榓nnual payment바카라 사이트� is not defined in the legislation. Its meaning comes from an extensive body of case law. This has established that to be an annual payment, a sum must possess four characteristics.

  • It must be payable under a legal obligation. For example, a university student might receive a regular termly contribution from his or her parents towards living expenses. This is not an annual payment, because there is no legal obligation to make the contribution.
  • The obligation to make payments must extend for more than a year - the payments must be capable of recurring. But the obligation may be contingent. In the case of Cunard바카라 사이트檚 Trustees v CIR (27TC122), sums were to be paid from the capital of a will trust in any year in which trust income was insufficient to meet the beneficiary바카라 사이트檚 needs. These sums were held to be annual payments, despite the fact they were payable in some years but not in others. ITTOIA05/S683 (3) specifically provides that the frequency with which the payments are made does not matter.
  • It must be income, not capital, in the hands of the recipient. A capital sum may be paid in instalments - these are not annual payments.
  • It must represent pure income profit to the recipient. A sum is 바카라 사이트榩ure income profit바카라 사이트� if - like interest - it comes to the recipient without he or she having to do anything in return. It is 바카라 사이트榩ure profit바카라 사이트� because, under ITTOIA05/S684 (1), it is charged on the recipient without any deduction being permitted. SAIM8030 looks at this in more detail, and SAIM8050 gives examples.

Customer rewards and 바카라 사이트榗ashback바카라 사이트�

Inducements or rewards offered to customers by a trade, profession or vocation might constitute annual payments chargeable to tax under ITTOIA05/S683 if they possess the above four characteristics - see examples 2 and 3 at SAIM8050. It is a question of fact in each case whether a payment has these characteristics. 바카라 사이트楥ashbacks바카라 사이트� can present difficult issues (see Statement of Practice 4/1997), and HMRC staff should consult BAI (Financial Products Team) in cases of doubt.