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HMRC internal manual

Business Income Manual

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Post-cessation receipts and expenses: contents

Chapter 18 Part 2 Income Tax (Trading and Other Income) Act 2005, Chapter 15 Part 3 Corporation Tax Act 2009

This guidance looks at the taxation of post-cessation receipts and expenses of a trade. These provisions apply to professions and vocations as they apply to trades. Post-cessation receipts and expenses legislation also applies to property businesses under Chapter 10 Part 3 ITTOIA 2005 (sections 349-356) and Chapter 9 Part 4 CTA 2009 (sections 280-286). See PIM2510.

Taxation of post-cessation receipts

It is important to note that there is no requirement in the legislation that the person who receives the post cessation receipt is the one who carried on the trade in question; the tax liability is on the person who receives the income.

This guidance looks at the tax treatment that should be applied where the source (that is the person earning the income or the trade or business) has, for whatever reason ceased.

Relief for post-cessation expenses

Relief may be available for post-cessation expenses of a trade, although such expenses still have to satisfy the wholly and exclusively test and be revenue in nature in order to qualify for relief. There are a number of different ways in which post-cessation expenses can be relieved, which depend on the person incurring the expenditure and the type of expenditure incurred.

This chapter contains the following:

  1. BIM90005
    Has the trade ceased?
  2. BIM90010
    Charge to tax
  3. BIM90015
    Territorial scope of the provisions
  4. BIM90020
    Person liable to tax
  5. BIM90025
    Amount arising is relevant UK earnings
  6. BIM90030
    Meaning of post-cessation receipts
  7. BIM90035
    Meaning of post-cessation receipts: Debt paid after cessation
  8. BIM90040
    Meaning of post-cessation receipts: Debt released after cessation
  9. BIM90045
    Meaning of post-cessation receipts: Receipts relating to post-cessation expenses
  10. BIM90050
    Meaning of post-cessation receipts: Transfer of rights if transferee does not carry on the trade
  11. BIM90055
    Receipts which are not post-cessation receipts: Transfer of trading stock
  12. BIM90060
    Receipts which are not post-cessation receipts: Transfer of work in progress
  13. BIM90065
    Receipts which are not post-cessation receipts: Lump sums paid to personal representatives for copyright
  14. BIM90070
    Receipts which are not post-cessation receipts: Transfer of rights if the transferee carries on the trade
  15. BIM90075
    Election to carry back post-cessation receipts
  16. BIM90080
    Meaning of post-cessation expenses
  17. BIM90085
    Other provisions relieving expenses incurred after the cessation of the trade
  18. BIM90090
    Overview of reliefs for post-cessation expenses
  19. BIM90095
    Relief for post-cessation expenses against post-cessation receipts
  20. BIM90100
    Post-cessation trade relief
  21. BIM90105
    Post-cessation trade relief: Reduction for unpaid trade expenses
  22. BIM90110
    Post-cessation trade relief: Meaning of qualifying payment
  23. BIM90115
    Post-cessation trade relief: Meaning of qualifying event
  24. BIM90120
    Post-cessation trade relief: Targeted anti-avoidance provision
  25. BIM90125
    Post-cessation trade relief: Interaction with relief for liabilities of a former employment
  26. BIM90130
    Post-cessation expenses set against chargeable gains
  27. BIM90135
    Carry forward of unrelieved post-cessation expenses