PART XIX SUPPLEMENTAL

Interpretation

833 Interpretation of Income Tax Acts.

(1)

M1In the Income Tax Acts references to profits or gains shall not include references to chargeable gains.

(2)

M2References in the Income Tax Acts to the retail prices index are references to the general index of retail prices (for all items) published by the F1Office for National Statistics; and if that index is not published for a month which is relevant for the purposes of any provision of those Acts that provision shall be construed as referring to any substituted index or index figures published by F2that Office.

(3)

M3For the purposes of any provision of the Income Tax Acts (other than F3sections 535 to 537 of ITTOIA 2005F4. . . ) requiring income of any description to be treated as the highest part of a person’s income, his income shall be calculated without regard to—

F5(a)

any payment or other benefit charged to tax under Chapter 3 of Part 6 of ITEPA 2003 (payments and other benefits on termination of employment); or

(b)

any amount included in his total income by virtue of section F6465 of ITTOIA 2005F7which is a sum in relation to which section F8530 of that Act applies; or

(c)

any chargeable sum as defined in paragraph 2of Schedule 2 F4.

(4)

M4Subject to subsections (5) F9to (6) below, in the Income Tax Acts “earned income” means, in relation to any individual—

F10(a)

any income charged to tax under ITEPA 2003 except—

(i)

payments that meet the conditions in section 623 of that Act (return of surplus employee additional voluntary contributions); and

(ii)

jobseeker’s allowance (to which Chapter 3 of Part 10 of that Act applies);

(b)

any income from any property which is attached to or forms part of the general earnings from any employment; and

(c)

any income which is charged F11under Part 2 of ITTOIA 2005 (trading income) and is immediately derived by the individual from the carrying on or exercise by him of his trade, profession or vocation, either as an individual or, in the case of a partnership, as a partner personally acting in the partnership.

In cases where the income of a wife is deemed to be income of the husband, any reference in this subsection to the individual includes either the husband or the wife F12.

(5)

M5Without prejudice to the generality of the provisions of subsection (4) above, in the Income Tax Acts, except so far as is otherwise expressly provided, “earned income” also includes, in relation to any individual F13—

(a)

income to which subsection (5A) applies, and

(b)

income to which subsection (5B) applies.

F14(5A)

This subsection applies to income arising to the individual if—

(a)

it is charged to tax under section 583 of ITTOIA 2005 (income from disposals of know-how), and

(b)

the individual, alone or jointly, devised the know-how in question.

(5B)

This subsection applies to income arising to the individual if—

(a)

it is patent income, and

(b)

the individual, alone or jointly, devised the invention for which the patent in question was granted.

This is subject to subsection (5C).

(5C)

If—

(a)

any part of the rights in respect of the patent, or of any rights out of which they were granted, has at any time belonged to any other person, and

(b)

any part of the income is properly attributable to the rights which have belonged to that other person,

subsection (5B) does not apply to that part of the income (and so it is not earned income).

(5D)

In subsection (5B) “patent income” means—

(a)

royalties or other sums paid in respect of the use of a patent charged to tax under section 579 of ITTOIA 2005,

(b)

amounts on which tax is payable under section 587 or 593 of ITTOIA 2005, and

(c)

amounts on which tax is payable under—

(i)

section 472(5) of the Capital Allowances Act (patent allowances: balancing charges), or

(ii)

paragraph 100 of Schedule 3 to that Act (balancing charges in respect of pre-1st April 1986 expenditure on the purchase of patent rights).

(5E)

References in subsection (5C) to the rights in respect of the patent are to any right to do or authorise the doing of anything which would, but for the right, be an infringement of the patent.

(6)

M6The provisions of this section are without prejudice to any other provision of the Income Tax Acts directing income to be treated as earned income.