Part 13

Tax avoidance
Chapter 2

Transfer of assets abroad

Charge where power to enjoy income

Individuals with power to enjoy income as a result of relevant transactions
721
1
Income is treated as arising to such an individual as is mentioned in section 720(1) or 720A(1) in a tax year for income tax purposes if conditions A to C are met.
2
Condition A is that the individual has power in the tax year to enjoy income of a person abroad as a result of—
a
a relevant transfer,
b
one or more associated operations, or
c
a relevant transfer and one or more associated operations.
3
Condition B is that the income of the person abroad would be chargeable to income tax if it were the individual's and received by the individual in the United Kingdom.
3A
Condition C is that the individual is
UK
resident for the tax year.
3B
The amount of the income treated as arising under subsection (1) is equal to the amount of the income of the person abroad (subject to sections 724 and 725).
3C
Subsection (1) does not apply if—
a
the individual is liable for income tax charged on the income of the person abroad by virtue of a charge not contained in this Chapter, and
b
all that income tax has been paid.
4
For the purposes of subsection (2), it does not matter whether the income of the person abroad may be enjoyed immediately or only later.
5
It does not matter for the purposes of this section—
a. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
whether the individual is
UK
resident for the tax year in which the relevant transfer is made (if different from the tax year mentioned in subsection (1)), or
c
whether the avoiding of liability to income tax is a purpose for which the transfer is effected.
6
For the circumstances in which an individual is treated as having the power to enjoy income for the purposes of this section, see section 722.
Words in s. 721(3) inserted (with effect in accordance with Sch. 10 para. 20 of the amending Act) by Finance Act 2013 (c. 29), Sch. 10 para. 10(2)
S. 721(3B) substituted for s. 721(3B)(3BA) (for the tax year 2025-26 and subsequent tax years) by Finance Act 2025 (c. 8), Sch. 12 paras. 29, 70(1)
S. 721(5)(a) omitted (with effect in accordance with Sch. 10 paras. 20, 21(2) of the amending Act) by virtue of Finance Act 2013 (c. 29), Sch. 10 para. 10(5)
Pt. 13 Ch. 2 modified (for the tax year 2025-26 and subsequent tax years) by Finance Act 2025 (c. 8), Sch. 10 paras. 10(9), 11
Words in s. 721(4) inserted (with effect in accordance with Sch. 10 para. 20 of the amending Act) by Finance Act 2013 (c. 29), Sch. 10 para. 10(4)
S. 721(3A) inserted (with effect in accordance with Sch. 46 para. 72 of the amending Act) by Finance Act 2013 (c. 29), Sch. 46 para. 61(3) (with Sch. 46 para. 73)
S. 721(5)(b) substituted (with effect in accordance with Sch. 46 para. 72 of the amending Act) by Finance Act 2013 (c. 29), Sch. 46 para. 61(4) (with Sch. 46 para. 73)
Pt. 13 Ch. 2 applied (with effect in accordance with art. 1(2)(3) Sch. 1 of the amending S.I.) by The Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001), regs. 1(1), 21
Pt. 13 Ch. 2 applied by 1988 c. 1, s. 762ZA (as inserted (21.7.2008 with effect in accordance with Sch. 7 para. 98 of the amending Act) by Finance Act 2008 (c. 9), Sch. 7 para. 94)
Words in s. 721(1) substituted (with effect in accordance with Sch. 46 para. 72 of the amending Act) by Finance Act 2013 (c. 29), Sch. 46 para. 61(2) (with Sch. 46 para. 73)
S. 721(3B)(3C) inserted (with effect in accordance with Sch. 10 paras. 20, 21(1) of the amending Act) by Finance Act 2013 (c. 29), Sch. 10 para. 10(3)
Words in s. 721(1) inserted (with effect in accordance with s. 22(10) of the amending Act) by Finance (No. 2) Act 2024 (c. 12), s. 22(4)