Income and Corporation Taxes Act 1988

761 Charge to income tax or corporation tax of offshore income gain. U.K.

M1 (1) If a disposal to which this Chapter applies gives rise in accordance with section 758 [F1 or Schedule] 28 to an offshore income gain, then, subject to the provisions of this section, the amount [F2 of that gain—

(a) shall be treated for all the purposes of the Tax Acts as income arising at the time of the disposal to the person making the disposal, and

(b) shall be charged—

(i) to income tax for the year of assessment in which the disposal is made, or

(ii) to corporation tax [F3 , under the charge to corporation tax on income,] for the accounting period in which the disposal is made.]

[F4 (1A) The income tax charged by virtue of subsection (1)(b)(i) above shall be charged on the full amount of the income treated as arising in the year of assessment.]

(2) Subject to subsection (3) below, [F5 sections 2(1), 10 and 10B][F6 of the 1992 Act] (persons chargeable to tax in respect of chargeable gains) and [F7 section 19(3)(c) of CTA 2009] shall have effect in relation to income tax or corporation tax in respect of offshore income gains as they have effect in relation to capital gains tax or corporation tax in respect of chargeable gains.

(3) In the application of [F8 sections 10 and 10B][F6 of the 1992 Act] in accordance with subsection (2) above, paragraphs (a) and (b) of [F9 subsection (1) of section 10] (which define the assets on the disposal of which chargeable gains are taxable) shall have effect with the omission of the words “situated in the United Kingdom and”[F10 and paragraphs (a) and (b) of subsection (1) of section 10B (which make similar provision in relation to corporation tax) shall have effect with the omission of the words “situated in the United Kingdom and”].

F11 (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F12 (5) Subsections (1)(b) and (1A) are subject to section 762ZB (income treated as arising: non-UK domiciled individuals to whom remittance basis applies).]

(6) A [F13 charitable company] shall be exempt from [F14 corporation tax] in respect of an offshore income gain if the gain is applicable and applied for charitable purposes F15 . . . .

[F16 (6A) See section 535 of ITA 2007 for an exemption for income tax purposes for offshore income gains accruing to a charitable trust.

(6B) If property held on charitable trusts ceases to be subject to charitable trusts and that property represents directly or indirectly an offshore income gain, the trustees shall be treated as if they had disposed of and immediately reacquired that property for a consideration equal to its market value, any gain (calculated in accordance with Schedule 28) accruing being treated as an offshore income gain not accruing to a charity.

(6C) In this section “charity” and “charitable company” have the same meaning as in section 506 and “market value” has the same meaning as in the 1992 Act.]

(7) In any case where—

(a) a disposal to which this Chapter applies is a disposal of settled property, within the meaning of the [F6 1992] Act, and

[F17 (b) at the time of the disposal referred to in paragraph (a) above the trustees of the settlement are neither resident nor ordinarily resident in the United Kingdom for the purposes of the 1992 Act,]

subsection (1) above shall not apply in relation to any offshore income gain to which the disposal gives rise.

[F18 (8) Nothing in subsection (7) affects the application of this section in relation to an offshore income gain treated as arising by virtue of section 762(3).]

Textual Amendments

F1 1990 s.89and Sch.14 para.11 (correction of errors)—deemed always to have had effect. Previously

“and Schedule.”

F2 Words in s. 761(1) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 308(2) (with Sch. 2)

F3 Words in s. 761(1)(b)(ii) substituted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 220(2) (with Sch. 2 Pts. 1, 2)

F4 S. 761(1A) inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 308(3) (with Sch. 2)

F5 Words in s. 761(2) substituted (20.7.2005) by Finance (No. 2) Act 2005 (c. 22), s. 23(1)(a)(i)

F6 Words in s. 761(2)(3)(5)(6)(7)(a)(b) substituted (6.3.1992 with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch. 10 para. 14(47) (with ss. 60, 101(1), 171, 201(3))

F7 Words in s. 761(2) substituted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 220(3) (with Sch. 2 Pts. 1, 2)

F8 Words in s. 761(3) substituted (20.7.2005) by Finance (No. 2) Act 2005 (c. 22), s. 23(1)(b)(i)

F9 Words in s. 761(3) substituted (20.7.2005) by Finance (No. 2) Act 2005 (c. 22), s. 23(1)(b)(ii)

F10 Words in s. 761(3) substituted (20.7.2005) by Finance (No. 2) Act 2005 (c. 22), s. 23(1)(b)(iii)

F11 S. 761(4) repealed (6.3.1992 with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch.12 (with ss. 60, 101(1), 171, 201(3), Sch. 11 paras. 22, 26(2), 27)

F12 S. 761(5) substituted (with effect in accordance with Sch. 7 para. 98 of the amending Act) by Finance Act 2008 (c. 9), Sch. 7 para. 92(2)

F13 Words in s. 761(6) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 179(2)(a) (with Sch. 2)

F14 Words in s. 761(6) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 179(2)(b) (with Sch. 2)

F15 Words in s. 761(6) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 179(2)(c), Sch. 3 Pt. 1 (with Sch. 2)

F16 S. 761(6A)-(6C) inserted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 179(3) (with Sch. 2)

F17 S. 761(7)(b) substituted (with effect in accordance with Sch. 12 para. 47(2) of the amending Act) by Finance Act 2006 (c. 25), Sch. 12 para. 47(1)

F18 S. 761(8) inserted (with effect in accordance with Sch. 7 para. 98 of the amending Act) by Finance Act 2008 (c. 9), Sch. 7 para. 92(3)

Marginal Citations

M1 Source—1984 s.96; 1987 Sch.15 16(1)