(1) For the purposes of section 728(1), the capital receipt conditions are met in respect of the individual in a tax year (“the relevant year”) if—
(a) either—
(i) in the relevant year the individual receives or is entitled to receive any capital sum, whether before or after the relevant transfer, or
(ii) in any earlier tax year the individual has received any capital sum, whether before or after the relevant transfer, and
(b) the payment of that sum is (or, in the case of an entitlement, would be) in any way connected with any relevant transaction.
(2) But subsection (1)(a)(ii) does not apply merely because of the receipt of a sum by way of loan if the loan is wholly repaid before the relevant year begins.
(3) In subsection (1) “capital sum” means—
(a) any sum paid or payable by way of loan or repayment of a loan, and
(b) any other sum paid or payable—
(i) otherwise than as income, and
(ii) not for full consideration in money or money's worth.
(4) For the purposes of subsection (1), a sum is treated as a capital sum which the individual (“A”) receives or is entitled to receive if another person receives or is entitled to receive it—
(a) at A's direction, or
(b) as a result of the assignment by A of A's right to receive it.
729B Recovery of tax paid as a result of section 728
(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
(c) the amount of tax paid,
and any such certificate is conclusive evidence of the facts stated in it.
730 Qualifying new residents and remittance-basis users: “foreign” deemed income
(1) Subsection (2) applies in relation to income treated under section 728 as arising to an individual (“the deemed income”)—
(a) in the tax year 2024-25 or an earlier tax year if section 809B, 809D or 809E (remittance basis) applied to the individual for that tax year, or
(b) in the tax year 2025-26 or a later tax year if the individual is entitled to claim relief under section 845A of ITTOIA 2005 (qualifying new residents) for that tax year.
(2) For the purposes of this section the deemed income is “foreign” if (and to the corresponding extent that) the income mentioned in section 728(1)(a) would be relevant foreign income if it were the individual's.
(2A) Subsections (3) to (5) apply where the deemed income falls within subsection (1)(a).
(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 so much of the income within section 728(1)(a) as would be relevant foreign income if it were the individual's as deriving from the foreign deemed income.
(5) In the application of section 832 of ITTOIA 2005 to the foreign deemed income, subsection (2) of that section has effect with the omission of paragraph (b).
(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(8) As to income falling within subsection (1)(b), see the table in section 845H of ITTOIA 2005 (under which deemed income that is foreign for the purposes of this section is “qualifying foreign income” and so may be identified in a foreign income claim).
731 Charge to tax on income treated as arising under section 732
(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).
(1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2) Tax is charged under this section on the amount of income treated as arising for the tax year.
(2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(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 , etc).
732 Non-transferors receiving a benefit as a result of relevant transactions
(1) This section applies if—
(a) a relevant transfer occurs,
(b) an individual who is UK resident for a tax year receives a benefit in that tax year,
(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 , under any provision that is none of section 731 of this Act and sections 643A, 643J and 643L of ITTOIA 2005, on the amount or value of the benefit ....
(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.
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(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).
(2A) For the purposes of subsection (1), the amount deducted at Step 2 does not include the amount of any income on which tax was not charged under section 731 by virtue of—
(a) section 735AD(2) (transferor not taxable under benefits charge except where benefit matched to protected foreign-source income etc), or
(b) section 731(1A) (equivalent provision for tax years 2024-25 and earlier).
(2B) For the purposes of subsection (1), if in a tax year—
(a) income is treated as arising to an individual under section 721, 728 or 732, and
(b) the income is identified as qualifying foreign income on a foreign income claim,
the income is treated for later tax years as not having been charged to income tax ....
(2C) It follows from subsection (2B) that—
(a) in the application of subsection (1) to the individual for subsequent tax years, the amount of the income will be deducted at Step 2 and at paragraph (a) of Step 5, but
(b) in the application of subsection (1) to any other individual for subsequent tax years, the amount of the income will not be deducted at paragraph (b) of Step 5.
(2D) See paragraph 11 of Schedule 10 to FA 2025 (temporary repatriation facility) for special provision about income that is treated as arising under section 732 but that is exempt from income tax under that Schedule.
(2E) See subsections (7) and (8) of section 53 of FA 2026 (offshore income gains: savings relating to amendments made by section 52 of that Act) for special provision about income that is treated as arising under section 732 but that is not chargeable to income tax under subsection (3) of that section.
(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).
734 Reduction in amount charged: previous capital gains tax charge
(1) This section applies if—
(a) benefits provided as mentioned in section 732(1)(c) are received in a tax year,
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(d) chargeable gains are treated by section 87, 87K, 87L or 89(2) of, or paragraph 8 of Schedule 4C to, TCGA 1992 as accruing 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 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” has the same meaning as in section 733(1) (see Step 2).
(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 regulations ... 22 to 24 of the Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001)).
735 Qualifying new residents and remittance-basis users: “foreign” deemed income
(1) Subsection (2) applies in relation to income treated under section 732 as arising to an individual (“the deemed income”)—
(a) in the tax year 2024-25 or an earlier tax year if section 809B, 809D or 809E (remittance basis) applied to the individual for that tax year, or
(b) in the tax year 2025-26 or a later tax year if the individual is entitled to claim relief under section 845A of ITTOIA 2005 (qualifying new residents) for that tax 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.
(2A) Subsections (3) to (5) apply where the deemed income falls within subsection (1)(a).
(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.
(5) In the application of section 832 of ITTOIA 2005 to the foreign deemed income, subsection (2) of that section has effect with the omission of paragraph (b).
(6) As to income falling within subsection (1)(b), see the table in section 845H of ITTOIA 2005 (under which deemed income that is foreign for the purposes of this section is “qualifying foreign income” and so may be identified in a foreign income claim).
735A Section 735: relevant income and benefits relating to foreign deemed income
(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 any benefit so far as—
(i) chargeable gains (or offshore income gains) are treated as mentioned in section 734(1)(d) as accruing by reference to the benefit,
(ii) income is treated as mentioned in section 735AG(1)(b) as arising by reference to the benefit under section 643A, 643J or 643L of ITTOIA 2005 (settlements: benefits charge), or
(iii) income is treated as arising by reference to the benefit under section 732(2) and that income is identified in a foreign income claim,
(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 a person has been charged to income tax under section 731 by reason of the income.
735AA Settlements to which following sections apply
(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
(c) protected foreign-source income or transitionally protected income arose in relation to the transfer.
(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 “Protected foreign-source income” and “transitionally protected income”
(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), or
would 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, and
was 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).
735AD Settlor liable for benefits charge despite being transferor
(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 Settlor liable in place of close family member
(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
(c) the amount of tax paid,
and any such certificate is conclusive evidence of the facts stated in it.
735AF Onward gifts from non-residents or qualifying new residents
(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 Deduction allowed for previous settlements charge
(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).
735B Historical liability under section 733A where remittance basis applied
(1) This section applies in relation to income if—
(a) the income was treated under section 732 as arising to an individual (“the beneficiary”) for any of the tax years 2017-18 to 2024-25,
(b) the settlor was under section 733A(2) or (3) (as it had effect for that tax year) liable for tax on the income, and
(c) section 809B, 809D or 809E (remittance basis) applied to the settlor for that year.
(2) The income (“the transferred-liability deemed income”) is treated as relevant foreign income of the settlor.
(3) If, for the purposes of section 735 as it applies in relation to the beneficiary, any benefit or relevant income relates to any part of the transferred-liability deemed income then, for the purposes of Chapter A1 of Part 14 as it applies in relation to the settlor, that benefit or relevant income is to be treated as deriving from that part of the transferred-liability deemed income.
(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).
735C Historical operation of section 733C or 733E where remittance basis applied
(1) This section applies in relation to income if—
(a) the income was treated as arising to an individual for any of the tax years 2018-19 to 2024-25—
(i) as a result of the operation of section 733C(3) and (4) where section 733C(3) applied because of section 733C(2), or
(ii) as a result of the operation of section 733E, and
(b) section 809B, 809D or 809E (remittance basis) applied to the individual for that year.
(2) The income is treated as relevant foreign income of the individual.
(3) For the purposes of Chapter A1 of Part 14 (remittance basis) treat the onward payment, or (as the case may be) the part of it whose amount or value is equal to the amount of the income, as deriving from the income.
(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.
(1) Sections 737 to 742 deal with exemptions from liability under this Chapter.
(2) Some exemptions apply according to whether the relevant transactions are all pre-5 December 2005 transactions or all post-4 December 2005 transactions or include both (see sections 737, 739 and 740).
(2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) In this section and sections 737 to 742—
“post-4 December 2005 transaction” means a relevant transaction effected on or after 5 December 2005, and
“pre-5 December 2005 transaction” means a relevant transaction effected before 5 December 2005.
737 Exemption: all relevant transactions post-4 December 2005 transactions
(1) This section applies if all the relevant transactions are post-4 December 2005 transactions.
(2) An individual is not liable to income tax under this Chapter for the tax year by reference to the relevant transactions if the individual satisfies an officer of Revenue and Customs—
(a) that Condition A is met, or
(b) in a case where Condition A is not met, that Condition B is met.
(3) Condition A is that it would not be reasonable to draw the conclusion, from all the circumstances of the case, that the purpose of avoiding liability to taxation was the purpose, or one of the purposes, for which the relevant transactions or any of them were effected.
(4) Condition B is that—
(a) all the relevant transactions were genuine commercial transactions (see section 738), and
(b) it would not be reasonable to draw the conclusion, from all the circumstances of the case, that any one or more of those transactions was more than incidentally designed for the purpose of avoiding liability to taxation.
(5) In determining the purposes for which the relevant transactions or any of them were effected, the intentions and purposes of any person within subsection (6) are to be taken into account.
(6) A person is within this subsection if, whether or not for consideration, the person—
(a) designs or effects, or
(b) provides advice in relation to,
the relevant transactions or any of them.
(7) In this section—
“revenue” includes taxes, duties and national insurance contributions,
“taxation” includes any revenue for whose collection and management the Commissioners for Her Majesty's Revenue and Customs are responsible.
(8) If—
(a) apart from this subsection, an associated operation would not be taken into account for the purposes of this section, and
(b) the conditions in subsections (2) to (4) are not met if it is taken into account, because of—
(i) the associated operation, or
(ii) the associated operation taken together with any other relevant transactions,
it must be taken into account for those purposes.
(1) For the purposes of section 737, a relevant transaction is a commercial transaction only if it meets the conditions in subsections (2) and (3).
(2) It must be effected—
(a) in the course of a trade or business and for its purposes, or
(b) with a view to setting up and commencing a trade or business and for its purposes.
(3) It must not—
(a) be on terms other than those that would have been made between persons not connected with each other dealing at arm's length, or
(b) be a transaction that would not have been entered into between such persons so dealing.
(4) For the purposes of subsection (2), making investments, managing them or making and managing them is a trade or business only so far as—
(a) the person by whom it is done, and
(b) the person for whom it is done,
are persons not connected with each other and are dealing at arm's length.
739 Exemption: all relevant transactions pre-5 December 2005 transactions
(1) This section applies if all the relevant transactions are pre-5 December 2005 transactions.
(2) An individual is not liable for income tax under this Chapter for the tax year by reference to the relevant transactions if the individual satisfies an officer of Revenue and Customs that condition A or B is met.
(3) Condition A is that the purpose of avoiding liability to taxation was not the purpose, or one of the purposes, for which the relevant transactions or any of them were effected.
(4) Condition B is that the transfer and any associated operations—
(a) were genuine commercial transactions, and
(b) were not designed for the purpose of avoiding liability to taxation.
740 Exemption: relevant transactions include both pre-5 December 2005 and post-4 December 2005 transactions
(1) This section applies if the relevant transactions include both pre-5 December transactions and post-4 December transactions.
(2) An individual is not liable to tax under this Chapter for the tax year by reference to the relevant transactions if—
(a) the condition in section 737(2) (exemption where all relevant transactions are post-4 December 2005 transactions) is met by reference to the post-4 December 2005 transactions, and
(b) the condition in section 739(2) (exemption where all relevant transactions are pre-5 December 2005 transactions) is met by reference to the pre-5 December transactions.
(3) If subsection (2)(b) applies but subsection (2)(a) does not, this Chapter applies with the modifications in subsections (4) to (6).
(4) For the purposes of sections 720 to 730, any income arising before 5 December 2005 must not be brought into account as income of the person abroad.
(5) In determining the relevant income of an earlier tax year for the purposes of section 733(1) (see Step 4), it does not matter whether that year was a year for which the individual was not liable under section 731 because of section 739 or this section.
(6) For the purposes of Step 1 in section 733(1), a benefit received by the individual in or before the tax year 2005-06 is to be left out of account.
(7) But, in the case of a benefit received in the tax year 2005-06, subsection (6) applies only so far as, on a time apportionment basis, the benefit fell to be enjoyed in any part of the year that fell before 5 December 2005.
741 Application of section 742 (partial exemption)
(1) Section 742 (partial exemption where later associated operations fail conditions) applies if—
(a) an individual is liable to tax because of section 720 or 727 for a tax year (the “taxable year”) because condition B in section 737(4) (genuine commercial transaction: post-4 December 2005 transactions) is not met, and
(b) subsections (2) and (3) apply.
(2) This subsection applies if—
(a) since the relevant transfer there has been at least one tax year for which the individual was not so liable by reference to the relevant transactions effected before the end of the year, and
(b) the individual was not so liable for that year because—
(i) condition B in section 737(4) was met, or
(ii) condition B in section 739(4) (genuine commercial transaction: pre-5 December 2005 transactions) was met.
(3) This subsection applies if the income by reference to which the individual is liable to tax for the taxable year is attributable—
(a) partly to relevant transactions by reference to which one of those conditions was met for the last exempt tax year, and
(b) partly to associated operations not falling within paragraph (a).
(4) For the purposes of this section a tax year is exempt if—
(a) it is one of the tax years mentioned in subsection (2), and
(b) there is no earlier tax year for which the individual was liable to tax because of section 720 or 727 by reference to the relevant transactions or any of them.
(5) References in this section to a person being liable to tax for a tax year because of section 720 or 727 include references to the individual being so liable had any income been treated as arising to the individual for that year under section 721 or 728.
742 Partial exemption where later associated operations fail conditions
(1) If this section applies, the individual is liable to tax under this Chapter only in respect of part of the income for which the individual would otherwise be liable.
(2) That part is so much of the income as appears to an officer of Revenue and Customs to be justly and reasonably attributable to the operations mentioned in section 741(3)(b) in all the circumstances of the case.
(3) Those circumstances include how far those operations or any of them directly or indirectly affect—
(a) the nature or amount of any person's income, or
(b) any person's power to enjoy any income.
Sections 742C to 742E apply where it is necessary, for the purpose of calculating a charge to income tax under the preceding provisions of this Chapter, to determine the value of a benefit provided to a person by way of—
(a) a payment by way of loan (see section 742C),
(b) making available movable property without any transfer of the property in it (see section 742D), or
(c) making available land for use without transferring the whole interest in it (see section 742E).
742C Value of benefit provided by a payment by way of loan
(1) The value of the benefit provided to a person (P) by a payment by way of loan to P is, for each tax year in which the loan is outstanding, the amount (if any) by which—
(a) the amount of interest that would have been payable in that year on the loan if interest had been payable on the loan at the official rate, exceeds
(b) the amount of interest (if any) actually paid by P in that year on the loan.
(2) In this section and section 742D the “official rate”, in relation to interest, means the rate applicable from time to time under section 178 of the Finance Act 1989 for the purposes of Chapter 7 of Part 3 of ITEPA 2003.
742D Value of benefit provided by making movable property available
(1) The value of the benefit provided by making movable property available, without any transfer of the property in it, to a person (P) is, for each tax year in which the benefit is provided to P—
( CC × R × D Y ) − T
where—
CC is the capital cost of the movable property on the date when the property is first made available to P in the tax year,
D is the number of days in the tax year on which the property is made available to P (the relevant period),
R is the official rate of interest for the relevant period (but see subsection (3)),
T is the total of the amounts (if any) paid in the tax year by P—
to the person providing the benefit, in respect of the availability of the movable property, or
so far as not within paragraph (a), in respect of the repair, insurance, maintenance or storage of the movable property, and
Y is the number of days in the tax year.
(2) In subsection (1), in the meaning of CC, the “capital cost” of the movable property means an amount equal to the total of—
(a) the amount which is the greater of—
(i) the amount or value of the consideration given for the acquisition of the movable property by, or on behalf of, the person (A) providing the benefit, and
(ii) its market value at the time of that acquisition, and
(b) the amount of any expenditure wholly and exclusively incurred by, or on behalf of, A for the purpose of enhancing the value of the movable property.
(3) If the official rate of interest changes during the relevant period, then in subsection (1) R is the average official rate of interest for the period calculated as follows.
Step 1 Multiply each official rate of interest in force during the relevant period by the number of days when it is in force.
Step 2 Add together the products found in Step 1.
Step 3 Divide the total found in Step 2 by the number of days in the relevant period.
(4) In subsections (1) and (2), “movable property” means any tangible movable property other than money.
742E Value of benefit provided by making land available
(1) The value of the benefit provided by making land available for the use of a person (P) is, for each tax year in which the benefit is provided to P, the amount by which—
(a) the rental value of the land for the period of the tax year during which the land is made available to P, exceeds
(b) the total of the amounts (if any) paid in the tax year by P—
(i) to the person providing the benefit, in respect of the availability of the land, or
(ii) so far as not within sub-paragraph (i), in respect of costs of repair, insurance or maintenance relating to the land.
(2) Subsection (1) does not apply in the case where the person providing the benefit transfers the whole of the person's interest in the land to P.
(3) In subsection (1) “the rental value” of the land for a period means the rent which would have been payable for the period if the land had been let to P at an annual rent equal to the annual value.
(4) For the purposes of subsection (3) “the annual value” of land is the rent that might reasonably be expected to be obtained on a letting from year to year if—
(a) the tenant undertook to pay all taxes, rates and charges usually paid by a tenant, and
(b) the landlord undertook to bear the costs of the repairs and insurance and the other expenses (if any) necessary for maintaining the property in a state to command that rent.
(5) For the purposes of subsection (4) that rent—
(a) is to be taken to be the amount that might reasonably be expected to be so obtained in respect of a letting of the land, and
(b) is to be calculated on the basis that the only amounts that may be deducted in respect of services provided by the landlord are amounts in respect of the costs to the landlord of providing any relevant services.
(6) In subsection (5) “relevant service” means a service other than the repair, insurance or maintenance of the property.
(1) No amount of income may be taken into account more than once in charging income tax under this Chapter.
(2) If there is a choice about the persons in relation to whom any amount of income may be taken into account in charging income tax under this Chapter, it is to be taken into account—
(a) in relation to such one or more of them as appears to an officer of Revenue and Customs to be just and reasonable, and
(b) if more than one, in such respective proportions as appears to the officer to be just and reasonable.
(2A) Subsection (2B) applies if—
(a) in the case of an individual, an amount of income is taken into account in charging income tax under section 720 or 727, and
(b) the individual subsequently receives that income.
(2B) The income received is treated as not being the individual's income for income tax purposes.
(3) For the meaning of references in this section to an amount of income taken into account in charging tax, see section 744.
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
744 Meaning of taking income into account in charging income tax for section 743
(1) References in section 743 (no duplication of charges) to an amount of income taken into account in charging income tax are to be read as follows.
(2) In the case of tax charged on income under section 720 (charge where income enjoyed as a result of relevant transactions)—
(a) if section 724(1) (benefit provided out of income of person abroad) applies, they are references to an amount of the income out of which the benefit is provided equal to the amount ... charged, and
(b) otherwise they are references to the amount of the income mentioned in section 721(2).
(3) In the case of tax charged on income under section 727 (charge where capital sums received as a result of relevant transactions), they are references to the amount of the income mentioned in section 728(1)(a).
(4) In the case of tax charged under section 731 (charge to tax on income treated as arising to non-transferors where benefit received as a result of relevant transfers), they are references to the amount of relevant income taken into account under section 733 (income charged under section 731) in calculating the amount to be charged in respect of the benefit for the tax year in question.
745 Rates of tax applicable to income charged under sections 720 and 727 etc
(1) Income tax at the basic rate, or the starting rate for savings when that rate is more than 0%, ... is not charged under section 720 or 727 in respect of any income if (and to the corresponding extent that) the income mentioned in section 721(2) or 728(1)(a) has borne tax at that rate by deduction or otherwise.
(1A) Income tax at a Scottish rate above 0% and below, or equal to, the basic rate is not charged under section 720 or 727 in respect of any income if (and to the corresponding extent that) the income mentioned in section 721(2) or 728(1)(a) has borne tax at the basic rate.
(1B) Income tax at the Welsh basic rate when that rate is above 0% and below, or equal to, the basic rate is not charged under section 720 or 727 in respect of any income if (and to the corresponding extent that) the income mentioned in section 721(2) or 728(1)(a) has borne tax at the basic rate.
(2) Subsections (1) , (1A) and (1B) do not affect the tax charged if section 724(2) applies (benefit provided out of income of person abroad charged in year of receipt).
(3) Subsection (4) applies to income treated as arising to an individual under section 721 or 728 so far as none of subsections (1), (1A) and (1B) applies to it.
(4) The charge to income tax under section 720 or 727 operates by treating the income as if it were income within section 19(2) (meaning of “dividend income”) if the income mentioned in section 721(2) or 728(1)(a) would be dividend income were it the income of the individual.