Income Tax (Trading and Other Income) Act 2005 section 256

Post-cessation receipts

Section 256 deals with the tax treatment of post-cessation receipts, including transitional modifications that applied before 6 April 2006 and an exemption for certain elderly taxpayers whose trades ceased before 6 April 2000.

• Before 6 April 2006, section 256 was modified so that references to pension-related earnings used the older ICTA definitions of "relevant earnings" rather than the Finance Act 2004 concept of "relevant UK earnings".
• The Treasury retained the power to make transitional orders under sections 281 or 283 of Finance Act 2004, which could substitute the final version of section 256 for the temporarily amended version.
• Chapter 18 of Part 2, which taxes post-cessation receipts, does not apply at all where the person liable was born before 6 April 1917 and the trade ceased before 6 April 2000.
• These provisions ensured a smooth transition from the old pensions regime to the new one introduced by Finance Act 2004, while also protecting very elderly former traders from unexpected tax charges on old receipts.