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

Section 643F(4): benefits and income “relating” to deemed income
643G
1
In this section—
a
references to a step are to a step under section 643B(1) as it
applied
in the case of the settlement, the year and the relevant individual,
aa
references to section 643A, 643J or 643L (or to a provision of any of those sections) are to that section (or provision) as it had effect for the year,
b
“protected income” and “the relevant individual” have the meaning given by section 643F(6), and
c
“the settlement” and “the year” mean, respectively, the settlement and tax year mentioned in section 643F.
2
For the purposes of section 643F(4)—
a
place the benefits identified at Step 1 in the order in which they were received by the relevant individual (starting with the earliest benefit received),
b
where a deduction
was allowed
by any of paragraphs (a), (c) and (d) of Step 3 by reference to the whole or part of any of those benefits, reduce the benefit by the amount of the deduction,
c
place the protected income in the order in which it arose (starting with the earliest income to arise),
d
where the whole or part of an item of the protected income
was
, in respect of benefits provided by the trustees in the year or in any earlier tax year, taken into account in charging income tax under Chapter 2 of Part 13 of ITA 2007 (transfer of assets abroad) for the year or any earlier tax year, reduce the item by so much of itself as
was
so taken into account,
e
where the whole or part of an item of the protected income
was
, by reference to benefits provided by the trustees to individuals other than the relevant individual, treated by section 643A or 643J or 643L as income for the year or any earlier tax year, reduce the item by so much of itself as
was
so treated,”
f
place the income treated by section 643A(1) (before the application of section 643A(3) and (4)) as arising to the relevant individual in respect of the benefits referred to in paragraph (a) in the order in which it
was treated
as arising (starting with the earliest income treated as having arisen), and
g
treat the income mentioned in paragraph (f) as related to—
i
the benefits referred to in paragraph (a), and
ii
the protected income,
by matching the income mentioned in paragraph (f) with those benefits and the protected income (in the orders mentioned in paragraphs (a), (c) and (f)).
3
For the purposes of subsection (2)(d), the whole or part of an item of the protected income is to be treated as taken into account in respect of a benefit so far as the item or part—
a
is matched under section 735A of ITA 2007 with notional income with which the benefit is matched under that section, or
b
would be matched under that section (if it applied also for this purpose) with notional income with which the benefit would be matched under that section (if it applied also for this purpose),
and here “
notional income
” means income which is treated as arising under section 732 of ITA 2007.
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)
Word in s. 643G(1)(a) substituted (for the tax year 2025-26 and subsequent tax years) by Finance Act 2025 (c. 8), Sch. 12 paras. 19(2)(a), 70(1)
S. 643G(1)(aa) inserted (for the tax year 2025-26 and subsequent tax years) by Finance Act 2025 (c. 8), Sch. 12 paras. 19(2)(b), 70(1)
Words in s. 643G(2)(b) substituted (for the tax year 2025-26 and subsequent tax years) by Finance Act 2025 (c. 8), Sch. 12 paras. 19(3)(a), 70(1)
Word in s. 643G(2)(d) substituted (for the tax year 2025-26 and subsequent tax years) by Finance Act 2025 (c. 8), Sch. 12 paras. 19(3)(b), 70(1)
Word in s. 643G(2)(e) substituted (for the tax year 2025-26 and subsequent tax years) by Finance Act 2025 (c. 8), Sch. 12 paras. 19(3)(c), 70(1)
Words in s. 643G(2)(f) substituted for the tax year 2025-26 and subsequent tax years) by Finance Act 2025 (c. 8), Sch. 12 paras. 19(3)(d), 70(1)