Advance forfeited

This discussion clarifies the taxability of a forfeited advance payment made for purchasing an asset. If a £10,000 advance was given to X for an asset purchase and the contract was subsequently cancelled, leading to the forfeiture of the advance, this amount is generally considered taxable. It is taxable under Section 56(2)(xi) as income from other sources, especially if the asset in question is a capital asset as defined under Section 2(14).