Income Tax (Trading and Other Income) Act 2005 section 106

Sums recovered under insurance policies etc.

Section 106 deals with the transitional rule ensuring that sums recovered under insurance policies which were already accounted for before the 2005–06 tax year are not taxed again under the new legislation.

• Section 106 requires certain sums recovered under insurance policies to be brought into account as trading receipts.
• However, if such a recovered sum was already included in the profit calculations for a tax year before 2005–06, section 106 does not apply to that sum.
• This prevents the same insurance recovery from being taxed twice — once under the old rules and again under the 2005 Act.
• The rule applies equally to trades, professions and vocations.