- Latest available (Revised)
- Point in Time (01/04/2010)
- Original (As enacted)
Version Superseded: 17/07/2013
Point in time view as at 01/04/2010.
There are currently no known outstanding effects for the Income Tax Act 2007, Cross Heading: Charge where benefit received.
Revised legislation carried on this site may not be fully up to date. At the current time any known changes or effects made by subsequent legislation have been applied to the text of the legislation you are viewing by the editorial team. Please see ‘Frequently Asked Questions’ for details regarding the timescales for which new effects are identified and recorded on this site.
(1)Income tax is charged on income treated as arising to an individual under section 732 (non-transferors receiving a benefit as a result of relevant transactions).
(2)Tax is charged under this section on the amount of income treated as arising for the tax year.
[F1(2A)But see section 735 (non-UK domiciled individuals to whom remittance basis applies).]
(3)The person liable for any tax charged under this section is the individual to whom the income is treated as arising.
(4)For exemptions from the charge under this section, see sections 736 to 742 (exemptions where no tax avoidance purpose or genuine commercial transaction).
Textual Amendments
F1S. 731(2A) inserted (21.7.2008 with effect in accordance with Sch. 7 para. 170 of the amending Act) by Finance Act 2008 (c. 9), Sch. 7 para. 168
(1)This section applies if—
(a)a relevant transfer occurs,
(b)an individual who is ordinarily UK resident receives a benefit,
(c)the benefit is provided out of assets which are available for the purpose as a result of—
(i)the transfer, or
(ii)one or more associated operations,
(d)the individual is not liable to income tax under section 720 or 727 by reference to the transfer and would not be so liable if the effect of sections 726 and 730 were ignored, and
(e)the individual is not liable to income tax on the amount or value of the benefit (apart from section 731).
(2)Income is treated as arising to the individual for income tax purposes for any tax year for which section 733 provides that income arises.
(3)Also see that section for the amount of income treated as arising for any such tax year.
(1)To find the amount (if any) of the income treated as arising under section 732(2) for any tax year in respect of benefits provided as mentioned in section 732(1)(c) take the following steps.
Step 1
Identify the amount or value of such benefits received by the individual in the tax year and in any earlier tax years in which section 732 has applied.
The sum of those amounts and values is “the total benefits”.
Step 2
Deduct from the total benefits the total amount of income treated as arising to the individual under section 732(2) for earlier tax years as a result of the relevant transfer or associated operations.
The result is “the total untaxed benefits”.
Step 3
Identify the amount of any income which—
(a)arises in the tax year to a person abroad, and
(b)as a result of the relevant transfer or associated operations can be used directly or indirectly for providing a benefit for the individual.
That amount is “the relevant income of the tax year” in relation to the individual and the tax year.
Step 4
Add together the relevant income of the tax year and the relevant income of earlier tax years in relation to the individual (identified as mentioned in Step 3).
The sum of those amounts is “total relevant income”.
Step 5
Deduct from total relevant income—
(a)the amount deducted at Step 2, and
(b)any other amount which may not be taken into account because of section 743(1) and (2) (no duplication of charges).
The result is “the available relevant income”.
Step 6
Compare the total untaxed benefits and the available relevant income.
The amount of the income treated as arising under section 732(2) for any tax year is the total untaxed benefits unless the available relevant income is lower.
If the available relevant income is lower, it is the amount of income treated as so arising.
(2)Subsection (1) is subject to section 734 (reduction in amount charged: previous capital gains tax charge).
(3)See also section 740(5) to (7) (which makes provision about relevant income and benefits where relevant transactions include both transactions before 5 December 2005 and transactions after 4 December 2005 and exemptions under this Chapter cease to apply).
(1)This section applies if—
(a)benefits provided as mentioned in section 732(1)(c) are received in a tax year,
(b)for that tax year the whole or part of any benefits so provided is a capital payment to which section 87 or 89(2) of, or paragraph 8 of Schedule 4C to, TCGA 1992 applies (chargeable gains: gains attributed to beneficiaries),
(c)it is such a payment because the total untaxed benefits exceed the available relevant income (see Step 6 in section 733(1)) and so it is not treated as income arising to the individual under section 732(2), and
(d)because of that capital payment chargeable gains are treated as accruing to the individual in that or a subsequent tax year under any of the provisions referred to in paragraph (b).
(2)For any tax year after one in which such chargeable gains are 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 those gains.
(4)In this section “the total untaxed benefits” and “the available relevant income” have the same meaning as in section 733(1) (see Steps 2 and 5).
[F2(5)References in this section to chargeable gains treated as accruing to an individual include offshore income gains treated as arising to the individual (see [F3regulations 20 and 22 to 24 of the Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001)]).]
Textual Amendments
F2S. 734(5) 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. 97
F3Words in s. 734(5) substituted (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), 129(5)
(1)This section applies if—
(a)income is treated under section 732 as arising to an individual in a tax year (“the deemed income”),
(b)section 809B, 809D or 809E (remittance basis) applies to the individual for the year, and
(c)the individual is not domiciled in the United Kingdom in the year.
(2)For the purposes of this section the deemed income is “foreign” if (and to the extent that) the relevant income to which it relates would be relevant foreign income if it were the individual's.
(3)Treat the foreign deemed income as relevant foreign income of the individual.
(4)For the purposes of Chapter A1 of Part 14 (remittance basis) treat relevant income, or a benefit, that relates to any part of the foreign deemed income as deriving from that part of the foreign deemed income.
Textual Amendments
F4Ss. 735, 735A substituted (21.7.2008 with effect in accordance with Sch. 7 para. 170 of the amending Act) for s. 735 by Finance Act 2008 (c. 9), Sch. 7 para. 169
(1)For the purposes of section 735—
(a)place the benefits mentioned in Step 1 in the order in which they were received by the individual (starting with the earliest benefit received),
(b)deduct from those benefits so much of any benefit within section 734(1)(b) as gives rise as mentioned in section 734(1)(d) to chargeable gains or offshore income gains,
(c)place the income mentioned in Step 3 for the tax years mentioned in Step 4 (“the relevant income”) in the order determined under subsection (3),
(d)deduct from that income any income that may not be taken into account because of section 743(1) or (2) (no duplication of charges),
(e)place the income treated under section 732(2) as arising to the individual in respect of the benefits in the order in which it is treated as arising (starting with the earliest income treated as having arisen), and
(f)treat the income mentioned in paragraph (e) as related to—
(i)the benefits, and
(ii)the relevant income,
by matching that income with the benefits and the relevant income (in the orders mentioned in paragraphs (a), (c) and (e)).
(2)In subsection (1) references to a step are to a step in section 733(1).
(3)The order referred to in subsection (1)(c) is arrived at by taking the following steps.
Step 1
Find the relevant income for the earliest tax year (of the tax years referred to in subsection (1)(c)).
Step 2
Place so much of that income as is not foreign in the order in which it arose (starting with the earliest income to arise).
Step 3
After that, place so much of that income as is foreign in the order in which it arose (starting with the earliest income to arise).
Step 4
Repeat Steps 1 to 3.
For this purpose, read references to the relevant income for the earliest tax year as references to the relevant income for the first tax year after the last tax year in relation to which those Steps have been undertaken.
(4)For the purposes of subsection (3) relevant income is “foreign” where it would be relevant foreign income if it were the individual's.
(5)For those purposes treat income for a period as arising immediately before the end of the period.
(6)Subsection (1)(d) does not apply if the income may not be taken into account because the individual has been charged to income tax under section 731 by reason of the income.]
Textual Amendments
F4Ss. 735, 735A substituted (21.7.2008 with effect in accordance with Sch. 7 para. 170 of the amending Act) for s. 735 by Finance Act 2008 (c. 9), Sch. 7 para. 169
The Whole Act you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.
Would you like to continue?
The Whole Act you have selected contains over 200 provisions and might take some time to download.
Would you like to continue?
The Whole Act without Schedules you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.
Would you like to continue?
The Whole Act without Schedules you have selected contains over 200 provisions and might take some time to download.
Would you like to continue?
The Whole Act you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.
Would you like to continue?
The Whole Act without Schedules you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.
Would you like to continue?
The Schedules you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.
Would you like to continue?
Latest Available (revised):The latest available updated version of the legislation incorporating changes made by subsequent legislation and applied by our editorial team. Changes we have not yet applied to the text, can be found in the ‘Changes to Legislation’ area.
Original (As Enacted or Made): The original version of the legislation as it stood when it was enacted or made. No changes have been applied to the text.
Point in Time: This becomes available after navigating to view revised legislation as it stood at a certain point in time via Advanced Features > Show Timeline of Changes or via a point in time advanced search.
Geographical Extent: Indicates the geographical area that this provision applies to. For further information see ‘Frequently Asked Questions’.
Show Timeline of Changes: See how this legislation has or could change over time. Turning this feature on will show extra navigation options to go to these specific points in time. Return to the latest available version by using the controls above in the What Version box.
Text created by the government department responsible for the subject matter of the Act to explain what the Act sets out to achieve and to make the Act accessible to readers who are not legally qualified. Explanatory Notes were introduced in 1999 and accompany all Public Acts except Appropriation, Consolidated Fund, Finance and Consolidation Acts.
Access essential accompanying documents and information for this legislation item from this tab. Dependent on the legislation item being viewed this may include:
This timeline shows the different points in time where a change occurred. The dates will coincide with the earliest date on which the change (e.g an insertion, a repeal or a substitution) that was applied came into force. The first date in the timeline will usually be the earliest date when the provision came into force. In some cases the first date is 01/02/1991 (or for Northern Ireland legislation 01/01/2006). This date is our basedate. No versions before this date are available. For further information see the Editorial Practice Guide and Glossary under Help.
Use this menu to access essential accompanying documents and information for this legislation item. Dependent on the legislation item being viewed this may include:
Click 'View More' or select 'More Resources' tab for additional information including: