Income Tax Act 2007 section 776

Charge to tax on sale of occupation income

Section 776 establishes the income tax charge that applies when an individual converts what would otherwise be occupation income into a capital receipt or a derivative property or right.

• Income tax is charged on amounts treated as income under section 778 (capital amounts received that are not derivative property or rights) and section 779 (where a derivative property or right is obtained)
• The charge applies to the full amount of income treated as arising in the relevant tax year, with no partial relief or tapering
• The individual to whom the income is treated as arising is personally liable for the tax
• An exemption exists under section 784 where the transaction involves the genuine sale of a going concern