Sale of income for a capital sum

Source: HM Revenue & Customs | | 28/10/2019

A capital sum received by an individual in respect of the sale or relinquishment of income - derived from his or her personal activities - can sometimes be treated as earned income and chargeable to Income Tax. If this is the case, the amount charged to Income Tax is not also charged to Capital Gains Tax.

The following conditions must all be present before the sale of income legislation can operate.

  1. The individual must be carrying on an occupation wholly or partly in the UK.
  2. Transactions or arrangements must have been affected placing some other person in a position to exploit the earnings capacity of that individual.
  3. A 'capital amount' must have been obtained by the individual or for some other person, as part of, or in connection with, or in consequence of the transactions or arrangements.
  4. The main object, or one of the main objects, of the transactions or arrangements must be the avoidance or reduction of liability to Income Tax.

The charge to Income Tax will take place in the tax year or years in which the capital amount becomes receivable or the sale or realisation occurs.



 

Latest News

Changes to tax treatment of termination payments
29/07/2020 - More...
The government has published draft clauses for insertion into a new Finance Bill 2020-21, to be introduced into Parliament in the Autumn. These include changes which will affect

New redundancy protections for furloughed employees
29/07/2020 - More...
The government has unveiled an important new law that will protect furloughed workers who are made redundant. This will ensure that any employee who was furloughed under the

£50 bike repair voucher scheme launched
28/07/2020 - More...
The government has launched a new scheme - open to anyone in England - with a bike in need of repair. The Fix your Bike Voucher Scheme is a new initiative that has been championed

Search


Newsletter

With our newsletter, you automatically receive our latest news by e-mail and get access to the archive including advanced search options!

» Sign up for the Newsletter
» Login