What is the purpose of section 687 of the Income Tax (Trading and Other Income) Act 2005?

Section 687 acts as a residual catch-all or sweeper provision. It ensures no item of income escapes the United Kingdom income tax net simply because it does not fall within a specific charging provision elsewhere in the legislation. If no other Act charges the income, this section imposes the tax.

What types of income are excluded from the section 687 catch-all charge?

Annual payments and income falling within the disguised interest rules are both excluded from the section 687 charge. These categories of income have their own dedicated charging provisions elsewhere in the legislation. Additionally, income that is specifically exempt under other provisions is not brought back into charge by this section.

Does section 687 override existing income tax exemptions in United Kingdom law?

No. A key safeguard within section 687 is that it does not override existing exemptions. If income would normally be taxable under another provision but is specifically exempted — whether by Part 6 of the Act or other legislation — the sweeper charge does not apply. The exemption is fully respected.

Which specific exemptions are relevant to the section 687 sweeper charge?

Two exemptions are specifically highlighted as relevant. The first relates to the commercial occupation of woodlands, and the second concerns gains on commodity and financial futures. These are particularly pertinent because the types of income they cover might otherwise fall within this residual catch-all charge.

Income Tax (Trading and Other Income) Act 2005 section 687

Charge to tax on income not otherwise charged

Section 687 acts as a sweeper provision, imposing an income tax charge on any income that is not already subject to tax under any other provision of any Act.

Income from any source not already charged to income tax under another provision is taxable under this chapter — effectively a catch-all or sweeper charge
Annual payments and disguised interest income are excluded from this catch-all charge, as they are dealt with under their own specific rules
Income that would be taxable elsewhere but is specifically exempt is also excluded — so existing exemptions are preserved and not overridden
Particular exemptions relevant to this charge include those for commercial occupation of woodlands and gains on commodity and financial futures

Access full legislation.And much more.

By becoming a member, your team gets full access to Tax World research tools and source-backed tax resources.

Become a member