Income Tax Act 2007

502 Meaning of “untaxed income” in section 501

(1) For the purposes of section 501 the beneficiary’s income is untaxed income so far as the beneficiary is not liable to income tax on it wholly or partly because the beneficiary—

(a) has been non-UK resident, or

(b) has been treated as resident in a territory outside the United Kingdom under double taxation arrangements.

(2) If the income tax charged on the beneficiary for the beneficiary’s income is limited under Chapter 1 of Part 14 (limits on liability to income tax of non-UK residents), the untaxed income includes so much of the beneficiary’s income which is disregarded income (within the meaning of that Chapter) except so far as the disregarded income is within subsection (3).

(3) The disregarded income is within this subsection so far as—

(a) sums representing income tax have been deducted from the income,

(b) sums representing income tax have been treated as deducted from or paid in respect of the income, or

(c) there are tax credits in respect of the income.