Section 16C | Professionals in practice: incidental income from an office or employment

(1)This section applies where—

(a)a payment is received by an individual who carries on a profession (alone or in partnership),

(b)the payment is made to the individual in his or her capacity as an employee or office-holder, but is not made in respect of employment as a director of a company,

(c)the payment would otherwise be employment income of the individual chargeable to tax under Part 2 of ITEPA 2003,

(d)the conditions in subsection (3) are met, and

(e)where the individual carries on the profession in partnership, the condition in subsection (4) is also met.

(2)The payment is to be treated for income tax purposes as a receipt of a trade carried on by the individual or, where the individual carries on the profession in partnership, by the firm.

(3)The conditions referred to in subsection (1)(d) are that—

(a)the time spent by the individual in performing the duties of the office or employment is insubstantial compared with the time spent by the individual in carrying on the profession,

(b)the office or employment is related to the profession carried on by the individual,

(c)the amount of the payment is insubstantial compared with—

(i)the total amount brought into account as receipts when calculating the individual’s trade profits; or

(ii)where the individual carries on a profession in partnership, so much of the total amount brought into account as receipts when calculating the firm’s profits as is attributable to the individual.

(4)The condition referred to in subsection (1)(e) is that the individual is required by the terms of the partnership agreement to account to the firm for the payment and does so.