Income Tax (Trading and Other Income) Act 2005

[F1 628A Exception for protected foreign-source income U.K.

(1) The rule in section 624(1) does not apply to income which arises under a settlement if it is protected foreign-source income for a tax year.

(2) For this purpose, income arising under a settlement in a tax year is “protected foreign-source income” for the tax year if Conditions A to F are met.

(3) Condition A is that the income would be relevant foreign income if it were income of a UK resident individual.

(4) Condition B is that the income is from property originating from the settlor (see section 645).

(5) Condition C is that when the settlement is created the settlor—

(a) is not domiciled in the United Kingdom, and

(b) if the settlement is created on or after 6 April 2017, is not deemed domiciled in the United Kingdom.

(6) Condition D is that there is no time in the tax year when the settlor is—

(a) domiciled in the United Kingdom, or

(b) deemed domiciled in the United Kingdom by virtue of Condition A in section 835BA of ITA 2007.

(7) Condition E is that the trustees of the settlement are not UK resident for the tax year.

(8) Condition F is that no property or income is provided directly or indirectly for the purposes of the settlement by the settlor, or by the trustees of any other settlement of which the settlor is a beneficiary or settlor, at a time in the relevant period when the settlor is—

(a) domiciled in the United Kingdom, or

(b) deemed domiciled in the United Kingdom.

(9) In subsection (8) “relevant period” means the period—

(a) beginning with the start of 6 April 2017 or, if later, the creation of the settlement, and

(b) ending with the end of the tax year.

(10) For the purposes of Condition F, the addition of value to property comprised in the settlement is to be treated as the direct provision of property for the purposes of the settlement.

(11) Section 628B (tainting) contains further provision for the purposes of Condition F.

(12) In this section “deemed domiciled” means regarded for the purposes of section 809(1)(b) of ITA 2007 as domiciled in the United Kingdom as a result of section 835BA of ITA 2007 having effect.

(13) Section 648(3) to (5) (relevant foreign income treated as arising under settlement only if and when remitted) do not apply for the purposes of this section.]

Textual Amendments

F1 Ss. 628A-628C inserted (16.11.2017) (with effect in accordance with Sch. 8 para. 39 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 8 para. 22

Modifications etc. (not altering text)

C1 S. 628A excluded (16.11.2017) by 2004 c. 12, Sch. 15 para. 8(4) (as inserted (with effect in accordance with Sch. 8 para. 39 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 8 para. 19)