Tax treatment of lump sum in return for income stream? Tax treatment of income stream?
I have a UK client company which is to be paid £4300 a month for 97 months. The client wants to sell this income stream for an up front lump sum payment. This will be approximately £325,000, giving the person paying the lump sum a return of approximately 6% per annum gross.
Any ideas regarding the correct tax treatment? Does my client treat the lump sum as a trading receipt in year one (the monthly payments are being received under a contract for partnering support, which is part of the company's trade).
And what about the tax treatment for the individual receiving the income stream? The receipts of £4,300 will be part capital and part income - is there an HMRC formula to calculate the income element? Does tax have to be deducted at source on any element?
Thanks for any advice.
- Payroll experience for beginning AAT student 122 1
- Providing registered office address to clients 110 1
- Share premium or Directors Loan 762 31
- Enquiry into tax return - how co-operative would you be? 403 8
- Halloween - do you celebrate it? 1,452 47
- Interest on HMRC contract settlement 184 3
- Goodwill gesture for providing work 470 12
- VAT reconciliation and VAT return on Sage 142 3
- What would you do in this situation? 224 5
- Filing a P87 (professional fees) before year end. 157 2
- Recommendations for payroll/AE software? 627 13
- More HMRC on gov.uk 656 11
- Rollover relief - when does gain crystallise in this situation? 118 1
- Offshore company transferring assets to a UK individual. 358 14
- Interest Free Loan - Salay Sacrifice? 256 4
- Research and development - repayment timescale 225 5
- Sole trader hid directorships. 429 6
- NOVA 559 1
- Clearing payments on account/ Sage 50 290 10
- Regional Development Grant 138 4
- Bonus Bonds 396
- Insolvency and whistle blowing 386
- Transfer of funds into recently set up company 300
- TPR imposes first penalty notice fines 263
- Husband proposes to buy the car as Director unable to acess finance 198
- Box 8 VAT Return - deposit payment 191
- Company Car Lease 170
- Finance Lease 161
- Form 42 154
- Demerger Reserve 135