Part 14Income tax liability: miscellaneous rules
Chapter 1Limits on liability to income tax of non-UK residents
Limit for non-UK resident individuals, trustees etc
811Limit on liability to income tax of non-UK residents
1
This section applies to income tax to which—
a
a non-UK resident, other than a company, is liable, or
b
a non-UK resident company is liable as a trustee.
2
Subsection (1) is subject to section 812 (case where limit not to apply).
3
The non-UK resident’s liability to income tax for a tax year is limited to the sum of amounts A and B.
4
Amount A is the sum of—
a
any sums representing income tax deducted from the non-UK resident’s disregarded income for the tax year (see section 813),
b
any sums representing income tax that are treated as deducted from or paid in respect of that income, and
c
any tax credits in respect of that income.
5
Amount B is the amount that, apart from this section, would be the non-UK resident’s liability to income tax for the tax year, if the following were left out of account—
a
the non-UK resident’s disregarded income for the tax year, and
b
any relief mentioned in subsection (6) to which the non-UK resident is entitled for the tax year as a result of—
i
section 56(3) or 460(3) of this Act or section 278(2) of ICTA (residence etc of claimants), or
ii
double taxation arrangements.
6
The reliefs referred to in subsection (5) are—
a
an allowance under Chapter 2 of Part 3 of this Act or section 257 or 265 of ICTA (personal allowance and blind person’s allowance),
b
a tax reduction under Chapter 3 of Part 3 of this Act or section 257A, 257AB, 257BA or 257BB of ICTA (tax reductions for married couples and civil partners),
c
relief under section 457 or 458 of this Act (payments to trade unions and police organisations),
d
a tax reduction under section 459 of this Act or section 273 of ICTA (payments for benefit of family members), and
e
relief under section 266 of ICTA (life assurance premiums).
812Case where limit not to apply
1
Section 811 does not apply to income tax to which non-UK resident trustees are liable for a tax year, if there is a beneficiary of the trust who is—
a
an individual who is ordinarily UK resident, or
b
a UK resident company.
2
For the purposes of subsection (1) a person is a beneficiary of the trust if—
a
the person is an actual or potential beneficiary of the trust, and
b
condition A or B is met in relation to the person.
3
Condition A is that the person is, or will or may become, entitled under the trust to receive some or all of any income under the trust.
4
Condition B is that some or all of any income under the trust may be paid to or used for the benefit of the person in the exercise of a discretion conferred by the trust.
5
The references in subsections (3) and (4) to any income under the trust include a reference to any capital under the trust so far as it represents amounts originally received by the trustees as income.
813Meaning of “disregarded income”
1
For the purposes of this Chapter income arising to a non-UK resident is “disregarded income” if it is—
a
disregarded savings and investment income (see section 825),
b
disregarded annual payments (see section 826),
c
disregarded pension income,
d
disregarded social security income,
e
disregarded transaction income (see section 814), or
f
income of such other description as the Treasury may by regulations designate for the purposes of this section.
2
But income in relation to which the non-UK resident has a UK representative for the purposes of section 126 of, and Schedule 23 to, FA 1995 (UK representatives of non-UK residents) is not disregarded income.
3
Income is “disregarded pension income” if it is chargeable under Part 9 of ITEPA 2003 (pension income) because any of the following provisions of that Act applies to it—
section 577 (UK social security pensions),
section 579A (pensions under registered pension schemes) (but see subsection (4) below),
section 609 (annuities for the benefit of dependants),
section 610 (annuities under non-registered occupational pension schemes), or
section 611 (annuities in recognition of another’s services).
4
Income chargeable under Part 9 of ITEPA 2003 because section 579A of that Act applies to it is disregarded pension income only if the registered pension scheme in question—
a
falls within paragraph 1(1)(f) of Schedule 36 to FA 2004, and
b
was, immediately before 6 April 2006, a retirement annuity contract to which section 605 of ITEPA 2003 applied.
5
Income is “disregarded social security income” if—
a
it is a taxable benefit listed in Table A in section 660 of ITEPA 2003, other than income support or jobseeker’s allowance, and
b
it is chargeable under Part 10 of that Act (social security income).
814Meaning of “disregarded transaction income”
1
Subsection (2) applies if a non-UK resident carries on (alone or in partnership) a business through a broker in the United Kingdom.
2
Income is “disregarded transaction income”, subject to subsection (6), if—
a
it is transaction income, and
b
the independent broker conditions are met in relation to the transaction in question.
3
Subsection (4) applies if a non-UK resident carries on (alone or in partnership) a business through an investment manager in the United Kingdom.
4
Income is “disregarded transaction income”, subject to subsection (6), if—
a
it is transaction income, and
b
the independent investment manager conditions are met in relation to the transaction in question.
5
In this Chapter “transaction income”, in relation to a transaction carried out through a broker or investment manager in the United Kingdom on behalf of a non-UK resident, means income which arises to the non-UK resident from—
a
so much of the non-UK resident’s business carried on (alone or in partnership) through the broker or investment manager as relates to the transaction, or
b
property or rights which, as a result of the transaction, are used by, or held by or for, the broker or investment manager on behalf of the non-UK resident.
6
Income is not disregarded transaction income if it is chargeable to income tax in accordance with section 171(2) of FA 1993 (profits of the underwriting business of a member of Lloyd's).
7
This section needs to be read with—
section 817 (the independent broker conditions),
sections 818 to 824 (the independent investment manager conditions),
section 827 (meaning of “investment manager” and “investment transaction”), and
section 828 (transactions through brokers and investment managers).