Income Tax (Trading and Other Income) Act 2005 section 416

Income charged

Section 416 establishes how much income tax is charged when a debt is released or written off, and how that amount is treated for tax purposes.

• Tax is charged on the amount of debt released or written off during the tax year in question
• The amount of debt released or written off is treated as income when calculating the liable person's total income
• Relief may be available under section 418 where the borrower is liable as a settlor
• The charge applies to the full amount released or written off, not a discounted or adjusted figure