Part 5 U.K. Miscellaneous income

Chapter 5 U.K. Settlements: amounts treated as income of settlor [F1 or family]

Textual Amendments

F1 Words in Pt. 5 Ch. 5 heading inserted (with effect in accordance with Sch. 10 para. 21 of the amending Act) by Finance Act 2018 (c. 3), Sch. 10 para. 3(2)

[F2 Transitional provision about protected foreign-source income and transitional trust income] U.K.

Textual Amendments

F2 S. 643A cross-heading substituted (for the tax year 2025-26 and subsequent tax years) by Finance Act 2025 (c. 8), Sch. 12 paras. 11, 70(1)

[F3 643C Meaning of “available protected income” in section 643A U.K.

(1) For the purposes of section 643A, take the following steps to determine the amount of available protected income in relation to an individual (“P”), a settlement and a tax year (“the current tax year”)—

• Step 1

  Identify the total amount of protected foreign-source income and transitional trust income that arose (at any time) under the settlement (“the total protected income”).

• Step 2

  Deduct any amount of the total protected income that is matched under the transfer of assets abroad code in the current tax year or an earlier tax year.

• Step 3

  Deduct any amount of the total protected income on which P or any other individual is liable to income tax in the current tax year or an earlier tax year.

• Step 4

  Deduct any amount that, in relation to the settlement, is treated under section 643A as P’s income in an earlier tax year or as another individual’s income in any tax year.

• Step 5

  Add back the amount of any income falling within Step 4 that is identified as qualifying foreign income on a foreign income claim made by P or any other individual for any tax year.

(2) For the purposes of Step 1 in subsection (1), ignore section 648(3) to (5) (foreign income treated as “arising” under settlement only if and when remitted).

(3) For the purposes of Step 2 in subsection (1), an amount of the total protected income is “matched under the transfer of assets abroad code” if it is matched under section 735A of ITA 2007 with—

(a) benefits provided by the trustees to P or any other individual in the current tax year or in an earlier tax year, and

(b) an amount of income treated as arising to P or any other individual under section 732 of ITA 2007

(or if it would be so matched if section 735A applied for those purposes).

(4) For the purposes of Step 3 in subsection (1), ignore any liability to income tax arising under section 643A above or under section 731 of ITA 2007 (transfer of assets abroad: benefits charge).

(5) In Step 4 in subsection (1) and in subsection (4), a reference to section 643A includes, in relation to any of the tax years 2018-19 to 2024-25, section 643J and 643L (old onward gifting rules).]

Textual Amendments

F3 S. 643C substituted (for the tax year 2025-26 and subsequent tax years) by Finance Act 2025 (c. 8), Sch. 12 paras. 15, 70(1)