Income Tax (Trading and Other Income) Act 2005

Charge to tax on post-cessation receipts

242 Charge to tax on post-cessation receipts

Income tax is charged on post-cessation receipts arising from a trade.

243 Extent of charge to tax

(1) A post-cessation receipt is chargeable to tax under this Chapter only so far as it is not otherwise chargeable to income or corporation tax.

(2) Accordingly, a post-cessation receipt arising from a trade is not chargeable to tax under this Chapter so far as it is brought into account in calculating the profits of the trade for any period.

(3) A post-cessation receipt is not chargeable to tax under this Chapter if—

(a) it is received by or on behalf of a non-UK resident who is beneficially entitled to it, and

(b) it represents income arising outside the United Kingdom.

(4) A post-cessation receipt is not chargeable to tax under this Chapter if it arises from a trade carried on wholly outside the United Kingdom.

(5) A post-cessation receipt is not chargeable to tax under this Chapter in the case of a partner in a firm if—

(a) it represents income arising outside the United Kingdom from a trade carried on by the firm, and

(b) the partner’s share of the firm’s income arising out of the United Kingdom is treated as relevant foreign income by section 857(3) (partners to whom the remittance basis applies).

244 Income charged

(1) Tax is charged under this Chapter on the full amount of the receipts received in the tax year.

(2) This is subject to—

(a) sections 254 and 255 (allowable deductions), and

(b) section 257 (election to carry back).

245 Person liable

The person liable for any tax charged under this Chapter is the person receiving or entitled to the receipts.