What does section 610 of the Income Tax (Trading and Other Income) Act 2005 do?

Section 610 establishes that income tax is charged on the full amount of income arising in the tax year from a non-trade business involving films or sound recordings. The charge applies to the entire income for the year, not a reduced or partial figure. The calculation method is set out separately in sections 612 and 613.

How is the income figure calculated under section 610 ITTOIA 2005?

Section 610 does not itself set out the calculation method. Instead, section 612 explains how the income is calculated, and section 613 applies certain trading income rules to non-trade businesses of this kind. These sections together determine the actual income figure on which tax is charged for the relevant tax year.

What happens if income from films or sound recordings has a foreign element?

Where the income has a foreign dimension, the special rules in Part 8 of the Income Tax (Trading and Other Income) Act 2005 take priority. Part 8 contains provisions dealing specifically with foreign income, and these may modify how the charge under section 610 operates in practice for overseas-sourced royalties or similar payments.

Does section 610 apply to income from films and sound recordings exploited as a trade?

No. Section 610 applies only to non-trade businesses involving films or sound recordings. If the rights are exploited as part of a trade, the income would be taxed under the trading income provisions of the Act instead. Section 610 specifically targets income arising from activities that fall outside the scope of a recognised trade.

Income Tax (Trading and Other Income) Act 2005 section 610

Income charged

Section 610 establishes that tax on income from films and sound recordings carried on as a non-trade business is charged on the full amount of income arising in the tax year.

Tax is charged on the full amount of income arising in the tax year from a non-trade business involving films or sound recordings
The calculation of the amount of income charged is determined by separate rules set out in sections 612 and 613
Where the income has a foreign element, special rules in Part 8 of the Act may modify how this charge applies
The charge applies to the entire income for the year, not just a portion of it

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