[F174CMeaning of “non-active capacity” for purposes of [F2section 74A] etcU.K.
(1)For the purposes of [F3section 74A] an individual carries on a trade in a non-active capacity during a tax year if the individual—
(a)carries on the trade at a time during the year, and
(b)does not devote a significant amount of time to the trade in the relevant period for the tax year.
(2)For the purposes of this section an individual devotes a significant amount of time to a trade in the relevant period for a tax year if, in the relevant period, the individual spends an average of at least 10 hours a week personally engaged in activities of the trade and those activities are carried on—
(a)on a commercial basis, and
(b)with a view to the realisation of profits as a result of the activities.
(3)For this purpose “the relevant period” means the basis period for the tax year (unless the basis period is shorter than 6 months).
(4)If the basis period for the tax year is shorter than 6 months, “the relevant period” means—
(a)the period of 6 months beginning with the date on which the individual first started to carry on the trade (if the basis period begins with that date), or
(b)the period of 6 months ending with the date on which the individual permanently ceased to carry on the trade (if the basis period ends with that date).
(5)If—
(a)any relief is given on the assumption that the individual devoted or will devote a significant amount of time to the trade in the relevant period for a tax year, but
(b)the individual in fact failed or fails to do so,
the relief is withdrawn by the making of an assessment to income tax under this section.]
Textual Amendments
F1Ss. 74A-74D and cross-heading inserted (21.7.2008 with effect in accordance with Sch. 21 paras. 6, 7 of the amending Act) by Finance Act 2008 (c. 9), Sch. 21 para. 2
F2Words in s. 74C heading substituted (8.4.2010 with effect in accordance with Sch. 3 para. 11 of the amending Act) by Finance Act 2010 (c. 13), Sch. 3 para. 7(3)
F3Words in s. 74C(1) substituted (8.4.2010 with effect in accordance with Sch. 3 para. 11 of the amending Act) by Finance Act 2010 (c. 13), Sch. 3 para. 7(2)
Modifications etc. (not altering text)
C1Ss. 74B-74D applied (21.7.2009) by Finance Act 2009 (c. 10), Sch. 6 para. 1(11)(b)