INTM342530 - DT applications and claims - Types of income: Royalties
Copyright royalties continued
Royalties excluded from ICTA88/S536 include
- royalties for copies of works exported from the UK for distribution outside the UK. These are usually known as “foreign sales”.
- a lump sum payment for an outright purchase of a copyright or part of it for example serial rights.
- payments made by proprietors of newspapers or periodicals to overseas contributors of news, articles, and so on.
- copyright royalties payable to a professional author who lives overseas see INTM342590.
- copyright in cinematograph films see ICTA88/S536(2). However, this is interpreted as the copyright of the owner of the film and not the literary copyright of the author of the scenario or shooting script on which the film is based.
Charge to tax
ICTA88/S536 provides that UK income tax on royalties is deductible under ICTA88/S349.Under that section tax should be deducted and accounted for by the person who actuallymakes the payment. This means that tax could be deducted by
- the initial payer of the royalties
- the agent in the UK who the payments are made through under an agreement between the initial payer and the agent. It is expected that the payer will give the agent sufficient information so that tax is correctly deducted.
If the royalties are paid through an agent resident in the UK, tax is deducted from thegross royalty payment less the agent’s percentage commission (whether or not the agentactually deducts the tax). See IM4007 and IM4008.