EIM46002 - Double taxation provisions: introduction

ITEPA 2003 – Section 554Z5 and sections 554Z11B, C, D, E and F

The Finance Act 2017 amendments to Part 7A contain provisions designed to prevent double taxation of income arising from what will be essentially the same amounts of money or assets.

The amendments provide for relief dependent on the circumstances under which the double charge has occurred. Broadly, relief is given under a revised version of section 554Z5 where:

• a relevant step is taken and
• an earlier tax liability based on the same sum of money or asset has been paid in full or
• where the liability is not yet due and payable

Where a relevant step is taken and the earlier liability is due and payable but has not been paid, relief will be given under section 554Z11C at the point a payment is made.

Relief is given in both sections by considering the overlap between the sum of money or asset which is the subject of the relevant step and a sum of money or asset which gave rise to an earlier liability to Income Tax for the employee or director. The manner in which relief is given differs between section 554Z5 and section 554Z11C.

Relief is given in section 554Z5 by reducing the value of the relevant step if either of 2 conditions are met. Section 554Z11C gives relief where 2 or more charges exist at the point a payment is made by the taxpayer. It does this by treating the payment of one liability by the taxpayer as a payment on account of the other liability as well. It does not reduce the value of the relevant step.