Transfers of assets abroadU.K.
161U.K.In section 46B(4)(c) of TMA 1970 (questions to be determined by Special Commissioners), for “sections 720, 727 and 731” substitute “ any provision of Chapter 2 of Part 13 ”.
162U.K.In section 830(4) of ITTOIA 2005 (meaning of “relevant foreign income”), after paragraph (h) insert “and
(i)sections 726, 730 and 735 of that Act (transfer of assets abroad: foreign deemed income).”
163U.K.ITA 2007 is amended as follows.
164U.K.In section 720(4) (transfer of assets abroad: charge where power to enjoy income), after “abroad)” insert “ and section 726 (non-UK domiciled individuals to whom remittance basis applies) ”.
165U.K.For section 726 substitute—
“726Non-UK domiciled individuals to whom remittance basis applies
(1)This section applies in relation to income treated under section 721 as arising to an individual in a tax year (“the deemed income”) if—
(a)section 809B, 809D or 809E (remittance basis) applies to the individual for the year, and
(b)the individual is not domiciled in the United Kingdom in the year.
(2)For the purposes of this section the deemed income is “foreign” if (and to the extent that) the income mentioned in section 721(2) would be relevant foreign income if it were the individual's.
(3)Treat the foreign deemed income as relevant foreign income of the individual.
(4)For the purposes of Chapter A1 of Part 14 (remittance basis) treat so much of the income within section 721(2) as would be relevant foreign income if it were the individual's as deriving from the foreign deemed income.”
166U.K.In section 727 (transfer of assets abroad: charge where capital sums received), after subsection (3) insert—
“(3A)But see section 730 (non-UK domiciled individuals to whom remittance basis applies).”
167U.K.For section 730 substitute—
“730Non-UK domiciled individuals to whom remittance basis applies
(1)This section applies in relation to income treated under section 728 as arising to an individual in a tax year (“the deemed income”) if—
(a)section 809B, 809D or 809E (remittance basis) applies to the individual for the year, and
(b)the individual is not domiciled in the United Kingdom in the year.
(2)For the purposes of this section the deemed income is “foreign” if (and to the extent that) the income mentioned in section 728(1)(a) would be relevant foreign income if it were the individual's.
(3)Treat the foreign deemed income as relevant foreign income of the individual.
(4)For the purposes of Chapter A1 of Part 14 (remittance basis) treat so much of the income within section 728(1)(a) as would be relevant foreign income if it were the individual's as deriving from the foreign deemed income.”
168U.K.In section 731 (transfer of assets abroad: charge where benefit received), after subsection (2) insert—
“(2A)But see section 735 (non-UK domiciled individuals to whom remittance basis applies).”
169U.K.For section 735 substitute—
“735Non-UK domiciled individuals to whom remittance basis applies
(1)This section applies if—
(a)income is treated under section 732 as arising to an individual in a tax year (“the deemed income”),
(b)section 809B, 809D or 809E (remittance basis) applies to the individual for the year, and
(c)the individual is not domiciled in the United Kingdom in the year.
(2)For the purposes of this section the deemed income is “foreign” if (and to the extent that) the relevant income to which it relates would be relevant foreign income if it were the individual's.
(3)Treat the foreign deemed income as relevant foreign income of the individual.
(4)For the purposes of Chapter A1 of Part 14 (remittance basis) treat relevant income, or a benefit, that relates to any part of the foreign deemed income as deriving from that part of the foreign deemed income.
735ASection 735: relevant income and benefits relating to foreign deemed income
(1)For the purposes of section 735—
(a)place the benefits mentioned in Step 1 in the order in which they were received by the individual (starting with the earliest benefit received),
(b)deduct from those benefits so much of any benefit within section 734(1)(b) as gives rise as mentioned in section 734(1)(d) to chargeable gains or offshore income gains,
(c)place the income mentioned in Step 3 for the tax years mentioned in Step 4 (“the relevant income”) in the order determined under subsection (3),
(d)deduct from that income any income that may not be taken into account because of section 743(1) or (2) (no duplication of charges),
(e)place the income treated under section 732(2) as arising to the individual in respect of the benefits in the order in which it is treated as arising (starting with the earliest income treated as having arisen), and
(f)treat the income mentioned in paragraph (e) as related to—
(i)the benefits, and
(ii)the relevant income,
by matching that income with the benefits and the relevant income (in the orders mentioned in paragraphs (a), (c) and (e)).
(2)In subsection (1) references to a step are to a step in section 733(1).
(3)The order referred to in subsection (1)(c) is arrived at by taking the following steps.
Step 1
Find the relevant income for the earliest tax year (of the tax years referred to in subsection (1)(c)).
Step 2
Place so much of that income as is not foreign in the order in which it arose (starting with the earliest income to arise).
Step 3
After that, place so much of that income as is foreign in the order in which it arose (starting with the earliest income to arise).
Step 4
Repeat Steps 1 to 3.
For this purpose, read references to the relevant income for the earliest tax year as references to the relevant income for the first tax year after the last tax year in relation to which those Steps have been undertaken.
(4)For the purposes of subsection (3) relevant income is “foreign” where it would be relevant foreign income if it were the individual's.
(5)For those purposes treat income for a period as arising immediately before the end of the period.
(6)Subsection (1)(d) does not apply if the income may not be taken into account because the individual has been charged to income tax under section 731 by reason of the income.”
170U.K.The amendments made by paragraphs 161 to 169 have effect for the tax year 2008-09 and subsequent tax years.