Income Tax Act 2007 section 778

Income arising where capital amount other than derivative property or right obtained

Section 778 deals with the tax treatment of a capital amount received by an individual where that amount does not consist of property or a right that derives substantially all of its value from the individual's own activities.

• Where a capital amount is received that is not property or a right deriving its value mainly from the individual's activities, that capital amount is treated as the individual's income for income tax purposes.
• The income is treated as arising in the tax year in which the capital amount becomes receivable.
• A capital amount is not considered receivable until the person can effectively enjoy or dispose of it.
• The territorial scope means the rules apply where the occupation is carried on wholly or partly in the UK, but for non-UK residents only the portion attributable to UK activities is caught.