Income Tax (Trading and Other Income) Act 2005

[F1 643B Meaning of “untaxed benefits total” in section 643A U.K.

(1) For the purposes of section 643A, whether an individual has an untaxed benefits total for a settlement for a tax year (“the current year”), and (if so) its amount, are determined as follows—

• [F2 Step 1

  Identify each benefit provided by the trustees to the individual—

  (a)

  in the current tax year, or an earlier tax year for which the individual was UK resident, and

  (b)

  if the individual is not the settlor, at a time when the individual was a close member of the settlor’s family.]

• Step 2 Identify the amount or value of each benefit identified in the individual's case at Step 1, and calculate the total of those amounts and values.

• Step 3 Take the total calculated at Step 2 and deduct from it the following—

  (a)

  any part of it on which the individual is liable to income tax otherwise than under section 643A,

  (b)

  any income treated by section 643A, 643J or 643L as arising, to a person for a tax year earlier than the current year, by reference to any of the benefits identified in the individual's case at Step 1,

  (c)

  where the whole or part of a benefit identified in the individual's case at Step 1 is taken into account in charging income tax under Chapter 2 of Part 13 of ITA 2007, the amount or value of so much of the benefit as is taken into account in doing that, and

  (d)

  any amount required to be deducted by section 643D(2) (gains treated as accruing in a year before the current year).

• Step 4 If the result of the calculation at Step 3 is an amount greater than nil, that amount is the individual's untaxed benefits total for the settlement for the current year.

[F3 (2) For the purposes of Step 1 in subsection (1), if—

(a) the trustees provide a benefit to an individual in a given tax year,

(b) the individual is a close member of the settlor’s family when the benefit is provided,

(c) the individual is non-UK resident, or is a qualifying new resident, for the tax year, and

(d) the settlor is UK resident for the tax year,

the benefit is instead treated as provided to the settlor.]

(3) Sections 742C to 742E of ITA 2007 (value of certain benefits) apply for the purpose of calculating the value of a benefit for the purposes of this section as they apply for the purpose of calculating an income tax charge under Chapter 2 of Part 13 of ITA 2007.

(4) In this section and sections 643C to [F4 643EA], a reference to a benefit provided by trustees of a settlement is to—

(a) a benefit treated by subsection (6) as provided by the trustees, or

(b) any other benefit if it is provided by the trustees directly, or indirectly, out of—

(i) property comprised in the settlement, or

(ii) income arising under the settlement.

(5) In this section and sections 643C to [F5 643EA], a reference to a benefit provided by trustees of a settlement to an individual is to—

(a) a benefit treated by subsection (6) as provided by the trustees to the individual, or

(b) any other benefit if it is provided by the trustees to the individual directly, or indirectly, out of—

(i) property comprised in the settlement, or

(ii) income arising under the settlement.

(6) Where—

(a) income arises under a settlement, and

(b) the income, before being distributed, is the income of a person other than the trustees,

a benefit is for the purposes of subsection (4)(a) treated as provided by the trustees and is for the purposes of subsection (5)(a) treated as provided by the trustees to the person.

(7) A benefit treated as provided by subsection (6) is treated—

(a) as consisting of the income mentioned in that subsection, but after any reduction in accordance with Chapter 8 of Part 9 of ITA 2007 for trustees' expenses, and

(b) as provided at the time that income arises.]

Textual Amendments

F1 Ss. 643A-643N and cross-heading inserted (with effect in accordance with Sch. 10 para. 21 of the amending Act) by Finance Act 2018 (c. 3), Sch. 10 para. 11 (with Sch. 10 para. 22)

F2 Words in s. 643B(1) substituted (for the tax year 2025-26 and subsequent tax years) by Finance Act 2025 (c. 8), Sch. 12 paras. 14(2), 70(1)

F3 S. 643B(2) substituted (for the tax year 2025-26 and subsequent tax years) by Finance Act 2025 (c. 8), Sch. 12 paras. 14(3), 70(1)

F4 Word in s. 643B(4) substituted (for the tax year 2025-26 and subsequent tax years) by Finance Act 2025 (c. 8), Sch. 12 paras. 14(4), 70(1)

F5 Word in s. 643B(5) substituted (for the tax year 2025-26 and subsequent tax years) by Finance Act 2025 (c. 8), Sch. 12 paras. 14(4), 70(1)