Patrick Way KC discusses the tax issue that may arise when an artist sells their back catalogue.
Many rock musicians are selling their rights in respect of recordings and publishing rights and the market has become very buoyant.
The receipts, however, are typically treated as income receipts subject to tax at a marginal rate of 45% rather than capital receipts taxable at capital gains tax rates of 20%.
There is little room for manoeuvre but, if possible, planning should be exercised to enable the capital gains tax rate of tax to be due rather than the income tax rate.
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