BIM100355 - Sale of income by an individual in exchange for capital: conditions needed

S773-S779 Income Tax Act 2007

»Ê¹ÚÌåÓýapp following conditions must all be present before the sale of income legislation can operate.

  1. »Ê¹ÚÌåÓýapp individual must be carrying on an occupation (see BIM100360) wholly or partly in the UK.
  2. Transactions or arrangements must have been effected putting some other person in a position to exploit the earnings capacity of that individual.
  3. A ‘capital amount' (see BIM100365) 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. »Ê¹ÚÌåÓýapp main object, or one of the main objects, of the transactions or arrangements must be the avoidance or reduction of liability to Income Tax.

»Ê¹ÚÌåÓýapp effect of the provisions is that the capital amount, or any sale proceeds or realised value derived from it, is subject to a charge to Income Tax within the category of miscellaneous income in the tax year or years in which the capital amount becomes receivable or the sale or realisation occurs (BIM100370). »Ê¹ÚÌåÓýapp amount chargeable to Income Tax is not consideration for Capital Gains Tax purposes (CG14300).