Income Tax Act 2007

733 Income charged under section 731

(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).