# Taxation in the United Kingdom/Legislation/Section 18 of the Income and Corporation Taxes Act 1988

Section 18 of ICTA sets out the charge to tax under Schedule D.
Subsection (1) raises the charge to tax in respect of:
* Annual profits or gains arising or accruing on worldwide income from property of UK residents
* Annual profits or gains on worldwide trading income for UK residents
* Annual profits or gains on UK trading income or income from property
* All interest of money, annuities and other profits or gains not charged under Schedule A or ITEPA and not specifically exempted from tax.
Subsection (2) provides that the charge under Schedule D happens under different Cases.
Subsection (3) sets out the different Cases. There are different definitions for some of the Cases depending on whether you are looking at income tax or corporation tax. However, subsection (4A) provides that Subsections (1) to (4) only apply to income tax to the extent that they are needed in the application to corporation tax.
Subsection (5) notes that Parts III and IV of ICTA as well as ITTOIA have further related provisions.

## The Cases of Schedule D
### Case I

This Case covers tax in respect of any trade carried on in the United Kingdom or elsewhere but not contained in Schedule A.

### Case II

This Case covers tax in respect of any profession or vocation not contained in any other Schedule. In practice, it is not thought possible for a company to be charged to tax under Case II.

### Case III

For companies, this Case covers tax from loan relationships charged under this Case by Chapter II of Part IV of FA 1996. It also covers any annuity or other annual payment which is payable in respect of anything other than a loan relationship and which is not a payment under Schedule A.
For individuals, this Case covers UK interest-like receipts, but in practice this rule only applies insofar as it is relevant for the operation of corporation tax as individuals are taxed under ITEPA.

### Case IV

This does not apply to companies. For individuals, this Case covers income from overseas securities, but in practice this rule only applies insofar as it is relevant for the operation of corporation tax as individuals are taxed under ITEPA.

### Case V

This Case covers tax in respect of income arising from possessions out of the UK that are employment, social security or pension income taxed under ITEPA. For companies, it excludes anything falling within Case III.

### Case VI

This Case covers tax in respect of any annual profits or gains not falling under any other Case and not taxed under Schedule A, or as employment, social security or pension income under ITEPA.

## Further provisions and definitions

Subsections (3B) to (3E) provide some supplemental provisions.
Subsection (3B) expands the meaning of relevant foreign holdings to include proceeds of a sale or other realisation of coupons for foreign dividends effected by a UK bank that pays the proceeds over or credits them to an account, and any proceeds of a sale of such coupons in the UK by a person who isn't a bank or another dealer of coupons.
Subsection (3C) defines relevant foreign holdings for the purposes of this Section to mean non-UK government, public or local authority securities or any share or securities issued by a non-UK resident.
Subsection (3D) defines foreign dividends essentially to mean payments in respect of relevant foreign holdings.
Subsection (3E) defines bank to have the meaning given by Section 840A of ICTA. References in Section 18 to coupons include, in relation to any foreign dividends, warrants for an bills of exchange purporting to be drawn or made in payment of those dividends.