Income Tax (Trading and Other Income) Act 2005 section 16C

Professionals in practice: incidental income from an office or employment

Section 16C allows certain payments received by a practising professional in a minor employment or office-holding role to be treated as trading income rather than employment income, provided specific conditions about the nature and scale of the role and payment are met.

• A professional in practice (sole or partnership) who receives a payment as an employee or office-holder (but not as a company director) may treat that payment as trading income instead of employment income.
• The time spent on the employment or office duties must be insubstantial compared with the time spent practising the profession, and the role must be related to that profession.
• The payment itself must be insubstantial compared with the individual's total trade receipts (or, in a partnership, the individual's share of the firm's receipts).
• Where the individual practises in partnership, the partnership agreement must require the individual to account the payment to the firm, and the individual must actually do so.