Income Tax (Trading and Other Income) Act 2005 section 261

Provisions which must be given priority over Part 3

Section 261 establishes which tax charging rules take priority when an item of income could potentially fall under both the trading income rules in Part 2 and certain property or other income rules in Part 3.

• Where a receipt qualifies both as trading income and as income from an overseas property business, rent from a UK section 12(4) concern, or UK electric-line wayleaves, the trading income rules in Part 2 take priority.
• This prevents the same income from being taxed twice under different Parts of the Act by establishing a clear hierarchy.
• The priority given to trading income reflects the long-standing principle that specific trading charges take precedence over more general income charges.
• This rule applies to any receipt or credit item, meaning it covers all forms of income regardless of how they arise, provided they fall within the overlapping categories.