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Avoidance rules, sale of income from personal occupation

E1.1201 Overview—sale of personal occupation income

Avoidance rules apply¹ where an individual sells their right to future earnings from an occupation for a capital amount. The rules can apply where the individual themselves or a third party, receives the capital sum, and the main object, or one of the main objects, of the arrangement is to reduce or avoid income tax².

The rules were brought in to target high earning entertainers, sporting personalities, and others, where conversion of income to capital might be expected to result in a lower overall tax charge.

The drafting provisions are wide and cover occupation income³, of a type which would usually be derived from a profession or vocation. The rules apply even where the individual concerned is in fact an employee or office holder (for example of their own personal service company).

For a discussion of similar rules which apply to the disposal of