Income Tax (Trading and Other Income) Act 2005 section 366

Provisions which must be given priority over Part 4

Section 366 establishes a hierarchy of priority rules to resolve overlaps where the same income could potentially be taxed under more than one charging provision, ensuring that Part 4 (savings and investment income) gives way to other Parts where applicable.

• Where income falls within both Part 4 (savings and investment income) and Part 2 (trading income), Part 2 takes priority — so the income is taxed as a trade receipt rather than as savings or investment income.
• Where income falls within both Part 4 and the UK property business rules in Part 3, Part 3 takes priority — so the income is taxed as a property business receipt.
• Where income falls within Part 4 (other than dividends from UK companies under Chapter 3, or release of loans to close company participators under Chapter 6) and also within the employment income, pension income or social security income provisions of ITEPA 2003, ITEPA 2003 takes priority.
• Gains from life insurance contracts (Chapter 9 of Part 4) are treated differently: amounts can be counted both as part of a Chapter 9 gain calculation and as income under other Parts of the Act, but section 527 provides a reduction to prevent double taxation.

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