Section 806 | Calculation of amount of income treated as received by the individual

The amount of income treated under section 805 as received by the individual in the tax year is calculated by taking the following steps. Step 1Calculate, at the end of the tax year, the total amount of the claimed losses (so far as relating to the licence) made by the individual in the trade in any early tax year during which the individual carried on the trade as a non-active partner.Step 2Calculate, at the end of the tax year, the total amount of the profits (so far as relating to the licence) made by the individual in the trade in any tax year.Step 3Deduct the total calculated at Step 2 from the total calculated at Step 1.The result is “the net licence-related loss”.If the net licence-related loss is nil or a negative figure— a the income treated as received in the tax year is nil, and b ignore Steps 4 and 5.Step 4Calculate, at the end of the tax year, the total amount or value of all non-taxable consideration received by the individual for relevant disposals (including consideration received in previous tax years).Step 5Deduct from— a the net licence-related loss, or b if less, the total calculated at Step 4,the total amount of all income treated under section 805 as received by the individual in previous tax years as a result of chargeable events.The result is the amount of the income treated as received in the tax year.(If the result is a negative figure, the income is nil.)