Legalize / United Kingdom / Public General Act

Income Tax Act 2007

Type Public General Act

Publication 2007-03-20

Last updated 2026-01-20

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

(4) In the application of section 832 of ITTOIA 2005 in relation to the income, subsection (2) of that section has effect with the omission of its paragraph (b).

(5) A reference in subsection (1) to section 733C or 733E (or to any provision of either section) is to that section (or provision) as it had effect for the tax year for which income was treated as arising to the individual.

Meaning of “Act”

Double taxation arrangements: deduction at treaty rate

Duty to deduct and account for sums representing income tax

Deduction from annual payments made by other persons

Meaning of “Act”

Territorial scope of charges under certain provisions to which section 1016 applies

Arrangements for payments of interest less tax or at specified net rate

Meaning of “bank”

Table of provisions to which this section applies

252B

(1) This section has effect for the purposes of section 175A(2)(a)(ii) (alternative initial investing period in case of knowledge-intensive company).

(2) Where—

(a) the annual turnover of the issuing company in relation to an accounting period (see subsection (3)) is £200,000 or more, and

(b) the annual turnover for the company in relation to each previous accounting period is less than £200,000,

the company is treated as reaching an annual turnover of £200,000 or more by reference to the specified date (see subsection (4)).

(3) The annual turnover in relation to an accounting period is—

(a) the turnover for that accounting period (if the accounting period is for 12 months), or

(b) the turnover for the period of 12 months ending when that accounting period ends (if not).

(4) The specified date is—

(a) in the case of an accounting period of 12 months or less, the last day of that accounting period;

(b) in the case of an accounting period of more than 12 months, the last day of the period of 12 months beginning when that accounting period begins.

(5) The turnover of the issuing company for a period (“the period”) is treated for the purposes of this section as including the relevant turnover of any company that is a member of the same group as the issuing company during the whole or any part of the period (a “group company”).

(6) The relevant turnover of a group company is—

(a) its turnover for the period, if the group company is a member of the same group as the issuing company for the whole of the period;

(b) if the group company is a member of the same group as the issuing company for part of the period, its turnover for that part of the period.

(7) Any necessary apportionments of turnover are to be made, on a time basis according to the respective lengths of the periods in question, for the purposes of subsections (3)(b) and (6).

(8) In this section “turnover” has the meaning given by section 474(1) of the Companies Act 2006 and is to be determined by reference to—

(a) the accounts of the company, and

(b) amounts recognised for accounting purposes.

280BA

(1) A company breaches the minimum investment on further issue condition where—

(a) there has been an issue of ordinary share capital of the company (“the first issue”),

(b) a VCT approval of the company has taken effect on or before the day of the making of the first issue,

(c) a further issue (“the further issue”) of ordinary share capital of the company has been made since the making of the first issue, and

(d) the company does not, on or before the relevant deadline, invest at least 30% of the money raised by the further issue in shares or securities which when held by the company are comprised in the company's qualifying holdings.

(2) The relevant deadline is the last day of the period of 12 months immediately following the end of the accounting period in which the further issue is made.

331B

(1) This section has effect for the purposes of sections 280C(3)(a)(ii) and 294A(2)(a)(ii) (alternative initial investing period in case of knowledge-intensive company).

(2) Where—

(a) the annual turnover of the relevant company in relation to an accounting period (see subsection (3)) is £200,000 or more, and

(b) the annual turnover for the company in relation to each previous accounting period is less than £200,000,

the company is treated as reaching an annual turnover of £200,000 or more by reference to the specified date (see subsection (4)).

(3) The annual turnover in relation to an accounting period is—

(a) the turnover for that accounting period (if the accounting period is for 12 months), or

(b) the turnover for the period of 12 months ending when that accounting period ends (if not).

(4) The specified date is—

(a) in the case of an accounting period of 12 months or less, the last day of that accounting period;

(b) in the case of an accounting period of more than 12 months, the last day of the period of 12 months beginning when that accounting period begins.

(5) The turnover of the relevant company for a period (“the period”) is treated for the purposes of this section as including the relevant turnover of any company that is a member of the same group as the relevant company during the whole or any part of the period (a “group company”).

(6) The relevant turnover of a group company is—

(a) its turnover for the period, if the group company is a member of the same group as the relevant company for the whole of the period;

(b) if the group company is a member of the same group as the relevant company for part of the period, its turnover for that part of the period.

(7) Any necessary apportionments of turnover are to be made, on a time basis according to the respective lengths of the periods in question, for the purposes of subsections (3)(b) and (6).

(8) In this section “turnover” has the meaning given by section 474(1) of the Companies Act 2006 and is to be determined by reference to—

(a) the accounts of the company, and

(b) amounts recognised for accounting purposes.

6B

(1) The Welsh basic rate, the Welsh higher rate and the Welsh additional rate for a tax year are calculated as follows.

Step 1 Take the basic rate, higher rate or additional rate.

Step 2 Deduct 10 percentage points.

Step 3 Add the Welsh rate (if any) set by the National Assembly for Wales for that year for the purpose of calculating the Welsh basic rate, the Welsh higher rate or the Welsh additional rate (as the case may be).

(2) For provision about the setting of the Welsh rates, see Chapter 2 of Part 4A of the Government of Wales Act 2006.

11B

(1) Income tax is charged at the Welsh basic rate on the income of a Welsh taxpayer which—

(a) is non-savings income, and

(b) would otherwise be charged at the basic rate.

(2) Income tax is charged at the Welsh higher rate on the income of a Welsh taxpayer which—

(a) is non-savings income, and

(b) would otherwise be charged at the higher rate.

(3) Income tax is charged at the Welsh additional rate on the income of a Welsh taxpayer which—

(a) is non-savings income, and

(b) would otherwise be charged at the additional rate.

(4) For the purposes of this section, “non-savings income” means income which is not savings income.

(5) This section is subject to—

section 13 (income charged at the dividend ordinary, upper and additional rates: individuals), and

any provisions of the Income Tax Acts (apart from section 10) which provide for income of an individual to be charged at different rates of income tax in some circumstances.

(6) Section 16 has effect for determining the extent to which the non-savings income of a Welsh taxpayer would otherwise be charged at the basic, higher or additional rate.

414A

(1) Subsections (3) and (4) apply if an individual makes a gift to a charity which is a qualifying donation, and for the tax year in which the gift is made—

(a) the individual is a Scottish taxpayer or a Welsh taxpayer,

(b) there is a difference between—

(i) the applicable devolved basic rate, and

(ii) the basic rate, and

(2) In this section—

“the applicable devolved basic rate”—is the Scottish basic rate if the individual is a Scottish taxpayer, andis the Welsh basic rate if the individual is a Welsh taxpayer,

“the ADBR amount” is the amount of the individual’s income liable to the applicable devolved basic rate, and

“the rate difference” means the difference between the basic rate and the applicable devolved basic rate.

(3) If, for the tax year in which the gift is made, the applicable devolved basic rate is above the basic rate—

(a) the individual is entitled to a tax reduction for that tax year,

(b) the tax reduction is given effect at Step 6 of the calculation in section 23,

(c) where the ADBR amount is more than or equal to the grossed up amount of the gift, the amount of the tax reduction is equal to the grossed up amount of the gift multiplied by the rate difference, and

(d) otherwise, the amount of the tax reduction is equal to the ADBR amount multiplied by the rate difference.

(4) If, for the tax year in which the gift is made, the applicable devolved basic rate is lower than the basic rate—

(a) income tax is charged under this subsection for that tax year,

(b) the individual is the person liable for the tax,

(c) where the ADBR amount is more than or equal to the grossed up amount of the gift, the amount of the tax is equal to the grossed up amount of the gift multiplied by the rate difference, and

(d) otherwise, the amount of the tax is the ADBR amount multiplied by the rate difference,

but see subsection (5).

(5) If, in the case of an individual (and ignoring this subsection), the total amount of tax charged under subsection (4) for a tax year is greater than the individual’s section 414(2)(b) tax saving for that year, the total amount of that tax is limited so as to be equal to the individual’s section 414(2)(b) tax saving for that year.

(6) For the purposes of subsection (5), the amount of an individual’s “section 414(2)(b) tax saving” for a tax year is—

(a) if the amount calculated at Step 5 of the calculation in section 23 in the individual’s case for that year is less than it would be were section 414(2)(b) not to have effect, equal to the difference, and

(b) otherwise is nil.

Restrictions on exemptions

Sections 809L and 809P: transfers from mixed funds

Statements about certain payments of interest

981A

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43A

For the purposes of this Chapter, a civil partnership between two people results from a relevant conversion if—

(a) the civil partnership results from—

(i) the conversion of their marriage into a civil partnership under Part 3 of the Marriage and Civil Partnership (Northern Ireland) (No. 2) Regulations 2020, or

(ii) the conversion of their marriage into a civil partnership under Part 4 or 5 of those Regulations, and

(b) the marriage took place before 5 December 2005.

Territorial scope of charges under certain provisions to which section 1016 applies

888DA

The duty to deduct a sum representing income tax under section 874 does not apply to a payment of interest (however the interest arises) by a QAHC (within the meaning of Schedule 2 to FA 2022).

24B

(1) Subsection (2) applies in relation to a taxpayer if—1

(a) they are the personal representative of a deceased person and, ignoring this section, their net income in that capacity at the end of Step 2 of the calculation in section 23 would be equal to or less than the de minimis estates amount, or

(b) they are the trustee of a settlement (“the relevant settlement”) and, ignoring this section, their net income in that capacity at the end of that Step would be equal to or less than the de minimis trusts amount.

(2) The taxpayer’s net income in their capacity as a personal representative of a deceased person or trustee of a settlement (as the case may be) at the end of Step 2 of the calculation in section 23 is taken to be £0.

(3) The de minimis estates amount is £500.

(4) The de minimis trusts amount is—

(a) £500, or

(b) in a case where subsection (5) applies, the higher of—

(i) £100, and

(ii) the settlor’s threshold amount.

(5) This subsection applies where—

(a) the settlor in relation to the relevant settlement is also the settlor in relation to one or more qualifying settlements,

(b) ignoring this section, the trust rate income (within the meaning of Part 9) for the tax year of the trustees of the relevant settlement would be greater than £0, and

(c) the relevant settlement is a settlement in respect of which each of the conditions mentioned in subsection (9) is met throughout the tax year.

(6) The settlor’s threshold amount is the amount given by—

$$£500QS+1$where QS is the total number of qualifying settlements.$

(7) If there is more than one settlor in relation to the relevant settlement—

(a) calculate the threshold amount of each of them, and

(b) use the lowest of those threshold amounts for the purposes of subsection (4)(b)(ii).

(8) A settlement is a “qualifying settlement” if—

(a) it is not the relevant settlement,

(b) it is in existence at a time during the tax year,

(c) ignoring this section, the trust rate income (within the meaning of Part 9) for the tax year of the trustees of the settlement would be greater than £0, and

(d) it is a settlement in respect of which each of the conditions mentioned in subsection (9) is met throughout the tax year.

(9) The conditions are—

(a) the property comprised in the settlement is not held for a pensions purpose within the meaning of paragraph 7(3) of Schedule 1C to TCGA 1992 (property comprised in settlements held for a pensions purpose);

(b) no income arising under the settlement is treated as the income of the settlor as a result of section 624 of ITTOIA 2005 (income where settlor retains an interest);

(c) the settlement is not a qualifying trust within the meaning of section 34 or 35 of FA 2005 (trusts for the benefit of disabled persons or relevant minors);

(d) the settlement is not a heritage maintenance settlement within the meaning of Chapter 10 of Part 9 (heritage maintenance settlements) (see section 507(2) and (3)).

Exclusion from restrictions under section 115: certain film expenditure

Restriction on reliefs for limited partners

Repair rule

719A

In this Chapter—

“closely-held company” means—a close company for the purposes of the Corporation Tax Acts (see Part 10 of CTA 2010), ora company that would be a close company if section 442(a) of CTA 2010 were ignored (non-UK resident company not to be treated as close);

“nominee”, in relation to an individual, means a person—who possesses any rights or powers on behalf of the individual, orwho may be required to exercise any rights or powers on the individual’s direction or behalf;

“participator” is to be construed in accordance with section 454 of CTA 2010.

720A

(1) The charge under section 720 also applies for the purpose of preventing the avoiding of a liability to taxation by means of a relevant transfer carried out by a closely-held company in which an individual has a qualifying interest.

(2) But the charge only applies in those circumstances if—

(a) the individual is involved in the company, and

(b) the avoidance condition is met.

(3) An individual has a qualifying interest in a closely-held company if the individual, or a nominee of the individual, is a participator in—

(a) the closely-held company, or

(b) the first closely-held company in a chain of two or more closely-held companies where each company in the chain is a participator in the next company in the chain, of which one such company is the closely-held company that carried out the relevant transfer.

(4) For the purposes of this section, an individual with a qualifying interest in a company is to be treated as being involved in the company unless the individual satisfies an officer of Revenue and Customs that neither the individual nor (in a case where the individual is not the relevant participator) the relevant participator has any direct or indirect involvement in the decision making of the company.

(5) The avoidance condition is met if—

(a) the relevant participator did not object to the making of the relevant transfer, and

(b) it is reasonable to draw the conclusion, from all the circumstances of the case, that the relevant participator was aware, or ought reasonably to have been aware—

(i) of the transfer, and

(ii) that one of the direct or indirect consequences of the transfer is the avoidance of a liability to taxation.

(6) For the purposes of subsections (4) and (5) the “relevant participator” means—

(a) in a case where the individual’s qualifying interest arises as a result of a nominee of the individual being a participator in a company, the nominee, or

(b) otherwise, the individual.

(7) Any arrangements to secure that a person has no direct or indirect involvement in the decision making of a company are to be disregarded if the main purpose, or one of the main purposes, of the arrangements is to secure that the condition in subsection (2)(a) is not met.

(8) Any arrangements that would result in the avoidance condition not being met are to be disregarded if the main purpose, or one of the main purposes, of the arrangements is to secure that the avoidance condition is not met.

(9) In this section—

“arrangements” include any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable);

“taxation” has the meaning it has in section 737.

727A

(1) The charge under section 727 also applies for the purpose of preventing the avoiding of a liability to taxation by means of a relevant transfer carried out by a closely-held company in which an individual has a qualifying interest.

(2) But the charge only applies in those circumstances if—

(a) the individual is involved in the company, and

(b) the avoidance condition is met.

(3) An individual has a qualifying interest in a closely-held company if the individual, or a nominee of the individual, is a participator in—

(a) the closely-held company, or

(b) the first closely-held company in a chain of two or more closely-held companies where each company in the chain is a participator in the next company in the chain, of which one such company is the closely-held company that carried out the relevant transfer.

(4) For the purposes of this section, an individual with a qualifying interest in a company is to be treated as being involved in the company unless the individual satisfies an officer of Revenue and Customs that neither the individual nor (in a case where the individual is not the relevant participator) the relevant participator has any direct or indirect involvement in the decision making of the company.

(5) The avoidance condition is met if—

(a) the relevant participator did not object to the making of the relevant transfer, and

(b) it is reasonable to draw the conclusion, from all the circumstances of the case, that the relevant participator was aware, or ought reasonably to have been aware—

(i) of the transfer, and

(ii) that one of the direct or indirect consequences of the transfer is the avoidance of a liability to taxation.

(6) For the purposes of subsections (4) and (5) the “relevant participator” means—

(a) in a case where the individual’s qualifying interest arises as a result of a nominee of the individual being a participator in a company, the nominee, or

(b) otherwise, the individual.

(7) Any arrangements to secure that a person has no direct or indirect involvement in the decision making of a company are to be disregarded if the main purpose, or one of the main purposes, of the arrangements is to secure that the condition in subsection (2)(a) is not met.

(8) Any arrangements that would result in the avoidance condition not being met are to be disregarded if the main purpose, or one of the main purposes, of the arrangements is to secure that the avoidance condition is not met.

(9) In this section—

“arrangements” include any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable);

“taxation” has the meaning it has in section 737.

Limit on reliefs in any tax year not to exceed cap for tax year

Meaning of “qualifying film expenditure”

No relief for tax-generated losses attributable to annual investment allowance

564DA

(1) This section applies to arrangements if under them—

(a) a person (“the customer”) has a beneficial interest in an asset,

(b) the customer disposes of some or all of their beneficial interest in the asset to another person (“the financier”),

(i) the financier is a financial institution or a regulated home purchase plan provider (within the meaning of section 564D(7)), or

(ii) the arrangements are regulated electronic system facilitated arrangements (within the meaning of section 564D(1A)),

(d) the customer is to make payments to the financier amounting in aggregate to the consideration paid for the financier acquiring a beneficial interest as mentioned in paragraph (b) (but subject to any adjustment required for such a reduction as is mentioned in subsection (6)),

(e) the customer is to acquire the financier’s beneficial interest (whether or not in stages) as a result of those payments,

(f) the customer is to make other payments to the financier (whether under a lease forming part of the arrangements or otherwise),

(g) the customer has the exclusive right to occupy or otherwise to use the asset, and

(h) the customer is exclusively entitled to any income, profit or gain arising from or attributable to the asset (including, in particular, an increase in its value).

(2) This section also applies to arrangements which supersede arrangements to which section 564D or subsection (1) of this section applies if under them—

(a) a person (“the financier”) acquires so much of the beneficial interest in an asset mentioned in section 564D(1)(a) or subsection (1)(b) of this section as has not yet been acquired as mentioned in section 564D(1)(d) or subsection (1)(e) of this section,

(b) either—

(i) the financier is a financial institution or a regulated home purchase plan provider (within the meaning of section 564D(7)), or

(ii) the arrangements are regulated electronic system facilitated arrangements (within the meaning of section 564D(1A)),

(c) the customer mentioned in section 564D(1) or subsection (1) of this section is to make payments to the financier amounting in aggregate to so much of the payments mentioned in section 564D(1)(c) or subsection (1)(d) of this section as are yet to be paid (but subject to any adjustment required for such a reduction as is mentioned in subsection (6)),

(d) that customer is to acquire the financier’s beneficial interest (whether or not in stages) as a result of those payments,

(e) that customer is to make other payments to the financier (whether under a lease forming part of the arrangements or otherwise),

(f) the customer has the exclusive right to occupy or otherwise to use the asset, and

(g) the customer is exclusively entitled to any income, profit or gain arising from or attributable to that asset (including, in particular, an increase in its value).

(3) For the purposes of subsections (1)(a) and (b) and (2)(a) it does not matter if—

(a) another person who is not the customer or the financier also has a beneficial interest in the asset, or

(b) the financier also has a legal interest in it.

(4) Subsection (1)(g) or (2)(f) does not prevent the customer from granting an interest or right in relation to the asset if the conditions in subsection (5) are met.

(5) The conditions are that—

(a) the grant is not to—

(i) the financier,

(ii) a person controlled by the financier, or

(iii) a person controlled by a person who also controls the financier, and

(b) the grant is not required by the financier or arrangements to which the financier is a party.

(6) Subsection (1)(h) or (2)(g) does not prevent the financier from—

(a) having responsibility for any reduction in the asset’s value, or

(b) having a share in a loss arising out of any such reduction.

(7) This section is subject to section 564H (provision not at arm’s length: exclusion of arrangements from sections 564C and 564D, this section and sections 564E to 564G).

564WA

(1) This section applies in respect of diminishing shared ownership arrangements to which 564DA applies.

(2) If, under the arrangements, the customer disposes of an asset as mentioned in section 564DA(1)(b), any profit, gain or loss realised by the customer on the disposal of the asset is to be treated as not having been realised for income tax purposes.

(3) If, under the arrangements, the customer—

(a) disposes of an asset as mentioned in section 564DA(1)(b),

(b) acquires the asset as mentioned in section 564DA(1)(d) and (e) or (2)(c) and (d),

the disposal of the asset mentioned in paragraph (a) and the acquisition of the asset mentioned in paragraph (b) (together with any intervening disposals or acquisitions of the asset) are to be treated as not having occurred for the purpose of calculating, for income tax purposes, the amount of the profit, gain or loss realised by customer on the subsequent disposal of the asset.

(4) In subsections (2) and (3), “the customer” has the same meaning as in section 564DA.

(5) If, under arrangements to which section 564DA(2) applies (“successor arrangements”), the financier under the diminishing shared ownership arrangements that the successor arrangements supersede transfers their interest in a lease forming part of those arrangements to the financier under the successor arrangements, the transfer is not to be treated as involving a disposal or acquisition of the interest for income tax purposes.

725A

(1) Where any tax for which an individual is liable as a result of section 721 is paid, the individual is entitled to recover the amount of the tax from the person abroad.

(2) For the purpose of recovering that amount, the individual is entitled to require an officer of Revenue and Customs to give the individual a certificate specifying—

(a) the tax year in which income is treated under section 721 as arising to the individual,

(b) the amount of income treated as arising, and

and any such certificate is conclusive evidence of the facts stated in it.

729B

(1) Where any tax for which an individual is liable as a result of section 728 is paid, the individual is entitled to recover the amount of the tax from the person abroad.

(2) For the purpose of recovering that amount, the individual is entitled to require an officer of Revenue and Customs to give the individual a certificate specifying—

(a) the tax year in which income is treated under section 728 as arising to the individual,

(b) the amount of income treated as arising, and

and any such certificate is conclusive evidence of the facts stated in it.

Transitional provision about protected foreign-source income and transitionally protected income

735AA

(1) Sections 735AB to 735C apply if—

(a) a relevant transfer occurred before 6 April 2025,

(b) the person abroad was—

(i) the trustees of a settlement, or

(ii) a company in which the trustees of a settlement were participators or indirect participators, and

(2) In sections 735AB to 735C—

“the relevant transfer” means the transfer referred to in subsection (1)(a);

“the settlement” means the settlement referred to in subsection (1)(b)(i) or (ii) (as the case may be);

“the settlor” means the settlor of that settlement.

(3) For the purposes of subsection (1)(b)(ii), the trustees of a settlement are “indirect participators” in a company if they are participators in the first in a chain of two or more companies where the last company in the chain is the person abroad and where each company in the chain (except the last) is a participator in the next company in the chain.

735AB

(1) For the purposes of sections 735AA to 735AF—

“protected foreign-source income”, in relation to the relevant transfer, means income of the person abroad that by reference to the transfer—would have been treated as arising to the settlor under section 721 in any of the tax years 2017-18 to 2024-25 had it not been protected foreign-source income within the meaning of section 721A (as that section had effect for that tax year), orwould have been treated as arising to the settlor under section 728 in any of the tax years 2017-18 to 2024-25 had it not been protected foreign-source income within the meaning of section 729A (as that section had effect for that tax year);

“transitionally protected income”, in relation to the relevant transfer, means income of the person abroad that by reference to the transfer—was treated as arising to the settlor under section 721 or 728 in a tax year earlier than the tax year 2017-18,was not remitted to the United Kingdom in a tax year earlier than the tax year 2017-18, andwas transitionally protected income within the meaning of section 726(7) or 730(7) throughout the tax years 2017-18 to 2024-25 (as that section had effect for those tax years).

(2) In subsection (1), in paragraph (b) of the definition of “transitionally protected income”, “remitted to the United Kingdom” is to be read in accordance with Chapter A1 of Part 14 (read with section 726 or 730 as the case may be).

735AC

Section 832 of ITTOIA 2005 (relevant foreign income charged on remittance basis) does not apply to transitionally protected income.

735AD

(1) For the purposes of section 732 (benefits charge: deemed income), subsection (1)(d) of that section (benefits charge confined to individuals not liable under section 720 or 727) is to be disregarded where the individual who receives the benefit is the settlor.

(2) But any income treated as arising to the settlor under section 732(2) is not taxed under section 731 unless the income would, assuming that section 735A applied for this purpose by reference to the settlor, be matched under that section with an amount of relevant income that is protected foreign-source income or transitionally protected income in relation to the relevant transfer.

735AE

(1) If—

(a) a benefit is provided to an individual in a given tax year out of assets which are available for the purpose as a result of—

(i) the relevant transfer, or

(ii) one or more associated operations,

(b) the individual is a close member of the settlor’s family at the time when the benefit is provided,

(c) the individual is non-UK resident, or is a qualifying new resident, for the tax year in which the benefit is provided, and

(d) the settlor is UK resident for that tax year,

the benefit is instead treated for the purposes of section 732 and section 735AD(1) as provided to the settlor.

(2) For the purposes of this section, a person is a “close member of the settlor’s family” at any time if the settlor is living at that time and—

(a) the person is the settlor’s spouse or civil partner at that time, or

(b) the person—

(i) is a child of the settlor, or of a person who at that time is the settlor’s spouse or civil partner, and

(ii) at that time has not reached the age of 18.

(3) For the purposes of subsection (2), two people living together as if they were a married couple or civil partners are treated as if they were spouses or civil partners of each other.

(4) Where any tax for which the settlor is liable as a result of this section is paid, the settlor is entitled to recover the amount of the tax from the individual concerned.

(5) For the purpose of recovering that amount, the settlor is entitled to require an officer of Revenue and Customs to provide the settlor with a certificate specifying—

(a) the tax year in which income was treated as arising to the settlor,

(b) the amount of income treated as arising, and

and any such certificate is conclusive evidence of the facts stated in it.

735AF

(1) Subsection (2) applies if—

(a) a benefit (“the original benefit”) is provided to an individual (“the original recipient”) out of assets which are available for the purpose as a result of—

(i) the relevant transfer, or

(ii) one or more associated operations,

(b) the original recipient is non-UK resident, or is a qualifying new resident, for the tax year in which they receive the original benefit,

(c) section 735AE (1) (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 there is 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 received by 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 received by the original recipient and, it is reasonable to assume, in anticipation of the original benefit’s being provided, and

(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.

(2) For the purposes of sections 732, 735AD(1) and 735AE(1), so much of the onward gift as falls within subsection (1)(f) is (so far as would not otherwise be the case) treated as a benefit provided to the subsequent recipient out of assets which are available for the purpose as a result of an associated operation in relation to the relevant transfer.

(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 conditions in subsection (1)(e) and (f) are met, it is to be presumed, unless the contrary is shown, that the condition in subsection (1)(d) is also met.

(5) In subsection (1)(d), “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).

735AG

(1) This section applies if—

(a) benefits provided as mentioned in section 732(1)(c) are received in a tax year, and

(b) income is treated under section 643A of ITTOIA 2005 as arising to a person in that or a subsequent tax year by reference (direct or indirect) to the whole or part of any benefits so provided.

(2) For any tax year after one in which such income is so treated, the amount of income treated as arising to the individual under section 732(2) in respect of benefits provided as mentioned in section 732(1)(c) as a result of the transfer or operations in question is calculated as follows.

(3) The amount is calculated under section 733(1) as if the total untaxed benefits were reduced by the amount of that income.

(4) The reference in subsection (1)(b) to income treated as arising under section 643A of ITTOIA 2005 includes, in relation to any of the tax years 2018-19 to 2024-25, a reference to income treated as arising under section 643J or 643L of ITTOIA 2005 (settlements code: old onward gift provisions).

(5) In this section “the total untaxed benefits” has the same meaning as in section 733(1) (see Step 2).

809RZA

(1) Subsection (2) applies to a transfer made from a mixed fund if—

(a) it is made from a mixed fund that contains TRF capital,

(b) the transfer is to a TRF capital account, and

(2) The transfer is to be treated as a transfer of TRF capital.

(3) Where subsection (2) would apply to a transfer but does not because of paragraph (c) of subsection (1)—

(a) that transfer is to be treated as two separate transfers occurring one immediately after the other, and

(b) the first of those transfers is to be treated as being in the amount of TRF capital in the mixed fund (and accordingly subsection (2) will apply to that deemed transfer but not the second, which may result in the TRF capital account ceasing to be a TRF capital account).

(4) Section 809RZB makes provision about the nomination of an account as a TRF capital account (and see sections 809RZC and 809RZD for the effect of making a transfer that contains amounts that are not TRF capital).

809RZB

(1) An individual may by notice to the Commissioners nominate an account to be a TRF capital account (and more than one nomination may have effect at any time).

(2) The notice must specify the qualifying date for the account.

(3) “The qualifying date” for the account is the first date on which there is paid into the account sums falling within subsection (4) which (in total) are more than £10 at a time when the credit balance of the account was £10 or less.

(4) A sum falls within this subsection if it is TRF capital.

(5) The individual may withdraw the nomination by giving a further notice to the Commissioners, specifying the date with effect from which the nomination is withdrawn.

(6) A notice under subsection (1) or (5) must be in writing and include such information as the Commissioners may reasonably require.

(7) A notice under subsection (1) or (5) must be given no later than—

(a) 31 January in the tax year following the tax year in which falls, as the case may be—

(i) the qualifying date for the account, or

(ii) the date with effect from which the nomination is withdrawn, or

(b) such later date as the Commissioners may allow.

(8) If an individual nominates an account under this section, the account is a “TRF capital account” of the individual throughout the period—

(a) beginning with the qualifying date, and

(b) ending with the date before the earliest of the following dates—

(i) the date on which the account is closed or ceases to be an ordinary bank account held by and for the benefit of the individual (alone or jointly with others);

(ii) the date with effect from which the nomination is withdrawn under this section;

(iii) 6 April in a tax year in which there is a breach of the TRF deposit rule which is not remedied or cannot be remedied.

(9) The account is not to be a TRF capital account at all if—

(a) at any time on the qualifying date, the account is not an ordinary bank account held by and for the benefit of the individual (alone or jointly with others), or

(b) immediately before the qualifying date, the account has a credit balance of more than £10.

(10) Where the account has a credit balance immediately before the qualifying date (which must be £10 or less), that balance is to be treated as TRF capital for the purposes of this Chapter.

(11) Where interest is payable on TRF capital held in the TRF capital account, any such interest paid into the account is to be treated as TRF capital for the purposes of this Chapter.

(12) The account is not to be a TRF capital account at all if the qualifying date falls in a tax year in which there is a breach of the TRF deposit rule which is not remedied or cannot be remedied.

(13) Subsection (8)(b)(iii) or (12) (as relevant) is to be ignored if the breach occurs on or after a date falling within subsection (8)(b)(i) or (ii).

(14) For the purposes of this section an account is an “ordinary bank account” if it is a cash account in a bank (whether a current or savings account) where sums standing to the credit of the account from time to time represent a debt owed by the bank to the account-holder.

(15) In this section, and in sections 809RZC and 809RZD, a reference to anything “paid into” an account includes anything credited to the account by whatever means.

809RZC

(1) There is a breach of the TRF deposit rule if one or more prohibited sums are paid into a TRF capital account on the qualifying date or any day after the qualifying date.

(2) A breach of the TRF deposit rule is remedied if, within 30 days beginning with the day on which the prohibited sums are paid into the account, the required amount is transferred out of the account by way of a single one-off qualifying transfer.

(3) A transfer is “qualifying” if it does not result in the remittance of any amount to the United Kingdom.

(4) “The required amount” is an amount equal to the total of the prohibited sums paid into the TRF capital account on the day of the breach.

(5) If there are 2 days in a tax year on which one or more breaches of the TRF deposit rule occur, subsection (2) does not apply to any breach on any subsequent day in the tax year (and accordingly any breach occurring on any day after the second day in the tax year on which there has been a breach cannot be remedied).

(6) A “prohibited sum” is anything other than a sum that is TRF capital.

809RZD

(1) This section applies if the required amount in relation to a breach of the TRF deposit rule was transferred out of the account in accordance with section 809RZC(2).

(2) Sections 809Q and 809R have effect as if—

(a) the intervening transactions had never taken place, and

(b) each prohibited sum represented by the required amount had instead been transferred directly (at the time that sum was paid into the TRF capital account) into the account or other property into which the required amount was transferred by virtue of the single one-off qualifying transfer.

(3) Each of the following is an “intervening transaction”—

(a) each payment into the TRF capital account of a prohibited sum represented by the required amount, and

(b) the single one-off qualifying transfer out of the TRF capital account.

809VIA

(1) This section applies in relation to a potentially chargeable event where, if no appropriate mitigation steps were regarded as taken, an amount of TRF capital would (ignoring this section) be treated as remitted to the United Kingdom immediately after the end of the relevant grace period as a result of section 809VG(2).

(2) Where there has been a disposal of all or part of the holding (see section 809VI(1) or (2)(b)), so much of the proceeds of that disposal as are equal to that amount of TRF capital is to be regarded as comprising that TRF capital.

(3) Section 809VI has effect as if references in that section to the disposal proceeds did not include the TRF capital.

(4) Unless section 809VG(2) applies in relation to the potentially chargeable event, the TRF capital is to be treated as remitted to the United Kingdom at the time the potentially chargeable event occurred.

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