Part 5

Miscellaneous income
Chapter 5

Settlements: amounts treated as income of settlor or family

Transitional provision about protected foreign-source income and transitional trust income

Onward gifts from non-residents or qualifying new residents
643EA
1
Subsection (2) applies if—
a
the trustees of a settlement provide a benefit (“the original benefit”) to an individual (“the original recipient”),
b
the original recipient—
i
is liable neither to income tax nor to capital gains tax by reference to the amount or value of the original benefit, or
ii
is a qualifying new resident for the tax year in which the original benefit is provided,
c
section 643B(2) (close family member’s benefits attributed to settlor) does not apply to the provision of the original benefit to the original recipient,
d
at the time when the original benefit is provided—
i
there are arrangements, or an intention, as regards the (direct or indirect) passing on of the whole or part of the original benefit to another person, and
ii
it is reasonable to expect that, if the whole or part of the original benefit is passed on to another person in accordance with the arrangements or intention, that other person will be UK resident when they receive at least part of what is passed on to them,
e
the original recipient provides a benefit (“the onward gift”) to another person (“the subsequent recipient”)—
i
at the time when the original benefit is provided to the original recipient, or at any later time in the 3 years beginning with the day containing that time, or
ii
at any time before the original benefit is provided to the original recipient and, it is reasonable to assume, in anticipation of the original benefit’s being provided,
f
the onward gift is of or includes—
i
the whole or part of the original benefit,
ii
anything that (wholly or in part, and directly or indirectly) derives from, or represents, the whole or part of the original benefit, or
iii
any other property, but only if the original benefit is provided with a view to enabling or facilitating, or otherwise in connection with, the property’s being provided to the subsequent recipient, and
g
the subsequent recipient—
i
is the settlor, or
ii
is a close member of the settlor's family at the time when they receive the onward gift or, where the onward gift is provided as mentioned in subsection (1)(e)(ii), at the time given by subsection (4).
2
So much of the onward gift as falls within subsection (1)(f) is treated for the purposes of section 643B(1) and (2)(a) as a benefit provided by the trustees to the subsequent recipient at the time when the onward gift is provided.
3
For the purposes of subsection (1)(e), the circumstances in which the original recipient provides a benefit to the subsequent recipient include circumstances where there is a series of two or more benefits starting with a benefit provided by the original recipient and ending with a benefit provided to the subsequent recipient; and in such a case—
a
the onward gift is treated for the purposes of subsection (1)(e) as provided when the final benefit in the series is provided, and
b
the reference to the onward gift in subsection (1)(f) is to be read as a reference to each benefit in the series.
4
Where the onward gift is made as mentioned in subsection (1)(e)(ii), it is treated for the purposes of subsection (2) as made immediately after, and in the tax year in which, the original benefit is provided to the original recipient.
5
Where the conditions in subsection (1)(e) to (g) are met in any case, it is to be presumed (unless the contrary is shown) that the condition in subsection (1)(d) is also met in that case.
6
Where the original recipient is liable neither to income tax nor to capital gains tax by reference to the amount or value of part only of the original benefit, this section applies as if the two parts of the original benefit were separate benefits.
7
In this section, “
arrangements
” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).
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)
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)
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)
S. 643EA inserted (for the tax year 2025-26 and subsequent tax years) by Finance Act 2025 (c. 8), Sch. 12 paras. 17, 70(1) (with Sch. 12 para. 71)