Law

Income Tax Act 2007

United Kingdom · statute

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In force since 2026-09-16, as the publisher states.

Copy read on 2026-11-08. The page it was read from

Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.

sha256 d41039ee89d56e2a41b16dabe0aee6ff436159b5fde34d4e35e2f7241db1985c

Contents: 1,664 provisions

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1,664 provisions

835 Residence rules for trustees ...

(1) See sections 475 and 476 for rules about the residence of the trustees of a settlement. (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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835A Residence of companies

Chapter 3 of Part 2 of CTA 2009 (rules for determining residence of companies) applies for the purposes of the Income Tax Acts as it applies for the purposes of the Corporation Tax Acts.

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835B Domicile for income tax purposes of overseas electors

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835BA Deemed domicile

(1) This section has effect for the purposes of the provisions of the Income Tax Acts or TCGA 1992 which apply this section. (2) An individual not domiciled in the United Kingdom at a time in a tax year (“the relevant tax year”) is to be regarded as domiciled in the United Kingdom at that time if— (a) condition A is met, or (b) condition B is met. (3) Condition A is that— (a) the individual was born in the United Kingdom, (b) the individual's domicile of origin was in the United Kingdom, and (c) the individual is UK resident for the relevant tax year. (4) Condition B is that the individual has been UK resident for at least 15 of the 20 tax years immediately preceding the relevant tax year. (5) But Condition B is not met if— (a) the individual is not UK resident for the relevant tax year, and (b) there is no tax year beginning after 5 April 2017 and preceding the relevant tax year in which the individual was UK resident.

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835C Overview of Chapter

(1) This Chapter provides for a branch or agency to be treated as the UK representative of a non-UK resident in respect of certain amounts chargeable to income tax. (2) For obligations and liabilities in relation to income tax imposed on a branch or agency which under this Chapter is treated as the UK representative of a non-UK resident, see Chapter 2C.

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835D Income tax chargeable on company's income: application

This Chapter does not apply in relation to income tax chargeable on income of a company otherwise than as a trustee.

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835E Branch or agency treated as UK representative

(1) This section applies if a non-UK resident carries on (alone or in partnership) any trade, profession or vocation through a branch or agency in the United Kingdom. (2) The branch or agency is the UK representative of the non-UK resident in relation to— (a) the amount of any income from the trade, profession or vocation that arises (directly or indirectly) through or from the branch or agency, and (b) the amount of any income from property or rights which are used by, or held by or for, the branch or agency. (3) The following rules are to be applied for the purposes of subsection (2) and Chapter 2C in relation to an amount within that subsection. Rule 1 The UK representative continues to be the UK representative of the non-UK resident in relation to the amount even after ceasing to be a branch or agency through which the non-UK resident carries on the trade, profession or vocation concerned. Rule 2 The UK representative is treated in relation to the amount as a distinct and separate person from the non-UK resident (if the representative would not otherwise be so treated). Rule 3 If the branch or agency is carried on by persons in partnership, the partnership, as such, is treated in relation to the amount as the UK representative of the non-UK resident. (4) For further rules that apply where a trade or profession carried on by a non-UK resident in the United Kingdom is carried on in partnership, see section 835F. (5) This section needs to be read with sections 835G to 835J (which provide for descriptions of persons who are not to be regarded as the UK representative of a non-UK resident if certain conditions are met).

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835F Trade or profession carried on in partnership

(1) Subsection (2) applies if a trade or profession carried on by a non-UK resident through a branch or agency in the United Kingdom is carried on by the non-UK resident in partnership. (2) The trade or profession carried on through the branch or agency is, for the purposes of section 835E and Chapter 2C, to be treated as including the notional trade or profession. (3) Subsection (4) applies (in addition to subsection (2) if that subsection also applies) if— (a) a trade or profession carried on by a non-UK resident in the United Kingdom is carried on by the non-UK resident in partnership, and (b) any member of the partnership is resident in the United Kingdom. (4) The notional trade or profession is, for the purposes of section 835E and Chapter 2C, to be treated as being a trade carried on in the United Kingdom through the partnership as such. (5) In this section “the notional trade or profession” means the notional trade from which the non-UK resident's share in the partnership's profits or losses is treated for the purposes of section 852 of ITTOIA 2005 as deriving.

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835G Agents

(1) This section applies if a non-UK resident carries on (alone or in partnership) a business through an agent in the United Kingdom. (2) The agent is not the UK representative of the non-UK resident in relation to an amount within section 835E(2) arising to the non-UK resident from— (a) so much of the non-UK resident's business as relates to disregarded transactions, or (b) property or rights which, as a result of disregarded transactions, are used by, or held by or for, the agent on behalf of the non-UK resident. (3) “Disregarded transactions” are transactions— (a) carried out through the agent in the United Kingdom, and (b) in respect of which the agent does not act in the course of carrying on a regular agency for the non-UK resident.

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835H Brokers

(1) This section applies if a non-UK resident carries on (alone or in partnership) a business through a broker in the United Kingdom. (2) The broker is not the UK representative of the non-UK resident in relation to an amount within section 835E(2) if— (a) the amount is transaction income in relation to a transaction carried out through the broker in the United Kingdom on behalf of the non-UK resident, and (b) the independent broker conditions are met in relation to the transaction (see section 835L). (3) In subsection (2) “transaction income”, in relation to a transaction carried out through a broker in the United Kingdom on behalf of a non-UK resident, has the same meaning as in Chapter 1 (see section 814(5)).

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835I Investment managers

(1) This section applies if a non-UK resident carries on (alone or in partnership) a business through an investment manager in the United Kingdom. (2) The investment manager is not the UK representative of the non-UK resident in relation to an amount within section 835E(2) if— (a) the amount is transaction income in relation to an investment transaction carried out through the investment manager in the United Kingdom on behalf of the non-UK resident, and (b) the independent investment manager conditions are met in relation to the investment transaction (see section 835M). (3) In subsection (2) “transaction income”, in relation to a transaction carried out through an investment manager in the United Kingdom on behalf of a non-UK resident, has the same meaning as in Chapter 1 (see section 814(5)).

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835J Persons acting under alternative finance arrangements

(1) Subsection (2) applies if an amount within section 835E(2) arising to a non-UK resident consists of alternative finance return. (2) Neither of the following is the UK representative of the non-UK resident in relation to the amount— (a) the other party to the alternative finance arrangements, (b) any other person acting for the non-UK resident in relation to the alternative finance arrangements. (3) In subsection (1) “alternative finance return” means alternative finance return within the application of section 564I, 564K or 564L(2) or (3). (4) In subsection (2) the reference to “the alternative finance arrangements” is a reference to the alternative finance arrangements under which the alternative finance return mentioned in subsection (1) arises.

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835K Lloyd's agents

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835L The independent broker conditions

(1) The independent broker conditions are met in relation to a transaction carried out on behalf of a non-UK resident by a broker in the United Kingdom if conditions A to D are met. (2) Condition A is that at the time of the transaction the broker is carrying on the business of a broker. (3) Condition B is that the transaction is carried out in the ordinary course of that business. (4) Condition C is that the remuneration which the broker receives in respect of the transaction for the provision of the services of a broker to the non-UK resident is not less than is customary for that class of business. (5) Condition D is that the broker does not fall (apart from this subsection) to be treated under this Chapter, or under Chapter 1 of Part 7A of TCGA 1992, as a UK representative of the non-UK resident in relation to any amounts that— (a) are not included in transaction income in relation to the transaction (see section 835H(2) and (3)), and (b) are chargeable to tax for the same tax year as that transaction income.

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835M The independent investment manager conditions

(1) The independent investment manager conditions are met in relation to an investment transaction carried out on behalf of a non-UK resident by an investment manager in the United Kingdom if conditions A to E are met. (2) Condition A is that at the time of the transaction the investment manager is carrying on a business of providing investment management services. (3) Condition B is that the transaction is carried out in the ordinary course of that business. (4) Condition C is that, when the investment manager acts on behalf of the non-UK resident in relation to the transaction, the relationship between them, having regard to its legal, financial and commercial characteristics, is a relationship between persons carrying on independent businesses dealing with each other at arm's length. (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6) Condition E is that the remuneration which the investment manager receives in respect of the transaction for the provision of investment management services to the non-UK resident is not less than is customary for that class of business.

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835N Investment managers: the 20% rule

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835O Meaning of “qualifying period”, “relevant disregarded income” and “beneficial entitlement”

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835P Treatment of transactions where 20% rule not met

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835Q Application of 20% rule to collective investment schemes

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835R Supplementary provision

(1) For the purposes of this Chapter a person is to be regarded as carrying out a transaction on behalf of another if the person— (a) undertakes the transaction, whether on behalf of or to the account of the other, or (b) gives instructions for it to be so carried out by another. (2) In the case of a person who acts as a broker or investment manager as part only of a business, this Chapter has effect as if that part were a separate business.

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835S Interpretation of Chapter

(1) This section applies for the purposes of this Chapter. (2) “Branch or agency” means any factorship, agency, receivership, branch or management. (3) “Investment manager” and “investment transaction” have the same meanings as in Chapter 1 (see section 827). (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5) Provision made in regulations under subsection (4) may, in particular, have effect in relation to the tax year current on the day on which the regulations are made.

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835T Introduction to Chapter

(1) This Chapter applies to the enactments relating to income tax so far as they make provision for or in connection with the assessment, collection and recovery of tax, or of interest on tax. (2) Those enactments have effect in accordance with section 835U in relation to amounts in respect of which a branch or agency is to be treated as the UK representative of a non-UK resident under Chapter 2B. (3) In this section “enactment” includes an enactment contained in subordinate legislation within the meaning of the Interpretation Act 1978.

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835U Obligations and liabilities of UK representative

(1) The obligations and liabilities of a non-UK resident are to be treated, for the purposes of the enactments to which this Chapter applies, as if they were also the obligations and liabilities of the UK representative of the non-UK resident. (2) Subsection (3) applies if— (a) the UK representative of a non-UK resident discharges an obligation or liability imposed by this section that corresponds to one to which the non-UK resident is subject, or (b) a non-UK resident discharges an obligation or liability that corresponds to one to which the non-UK resident's UK representative is subject by virtue of this section. (3) The corresponding obligation or liability— (a) of the non-UK resident (in a case within subsection (2)(a)), or (b) of the UK representative (in a case within subsection (2)(b)), is discharged. (4) A non-UK resident is bound, as if they were the non-UK resident's own, by acts or omissions of the non-UK resident's UK representative in the discharge of the obligations and liabilities imposed on the representative by this section. (5) This section is subject to sections 835V and 835W.

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835V Exceptions: notices and information

(1) An obligation or liability attaching to a non-UK resident (“X”) by reason of a notice or other document having been given or served on X does not also attach to the UK representative of X by virtue of section 835U unless the notice or other document (or a copy of it) has been given to or served on the representative. (2) An obligation or liability attaching to X by reason of a request or demand having been received by X does not also attach to the UK representative of X by virtue of section 835U unless the representative has been notified of the request or demand. (3) Subsection (4) applies to obligations relating to the provision of information that are imposed on the UK representative of X by section 835U in a case where the representative is X's independent agent. (4) The obligations do not require the UK representative to do anything except so far as it is practicable for the representative to do so. (5) For this purpose, the representative must act to the best of the representative's knowledge and belief after taking all reasonable steps to obtain the necessary information. (6) An obligation of X to provide information is not discharged by virtue of section 835U in a case where the UK representative of X has discharged the obligation only so far as required by subsection (4) of this section. (7) X is not bound by virtue of section 835U by mistakes in information provided by the UK representative of X in discharging, so far as required under subsection (4) of this section, an obligation imposed on the representative by section 835U unless— (a) the mistake is the result of an act or omission of X, or (b) the mistake is one to which X consented or in which X connived. (8) In this section “information” includes anything contained in a return, self-assessment, account, statement or report required to be provided to the Commissioners for Her Majesty's Revenue and Customs or to any officer of Revenue and Customs.

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835W Exceptions: criminal offences and penalties etc

(1) A person is not by virtue of section 835U liable to be proceeded against for a criminal offence unless the person— (a) committed the offence, or (b) consented to or connived in its commission. (2) An independent agent of a non-UK resident is not by virtue of section 835U liable to any civil penalty or surcharge in respect of an act or omission if conditions A and B are met. (3) Condition A is that the act or omission is not— (a) an act or omission of the independent agent, or (b) an act or omission to which the agent consented or in which the agent connived. (4) Condition B is that the independent agent is able to show that the amount of the penalty or surcharge will not be recoverable out of the sums mentioned in section 835X(3) (after being indemnified for any other liabilities under section 835X).

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835X Indemnities

(1) An independent agent of a non-UK resident is entitled to be indemnified for the amount of any liability of the non-UK resident which the agent has discharged by virtue of section 835U. (2) An independent agent of a non-UK resident is entitled to retain, from the sums mentioned in subsection (3), amounts sufficient to meet any liabilities which by virtue of section 835U the agent has discharged or to which the agent is subject. (3) The sums are those which— (a) (ignoring subsection (2)) are due from the independent agent to the non-UK resident, or (b) are received by the independent agent on behalf of the non-UK resident.

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835Y Meaning of “independent agent”

(1) In this Chapter “independent agent”, in relation to a non-UK resident (“X”), means a person who is the UK representative of X in respect of any agency in which the person is acting on behalf of X in an independent capacity. (2) For this purpose a person does not act in an independent capacity on behalf of X unless the relationship between them, having regard to its legal, financial and commercial characteristics, is a relationship between persons carrying on independent businesses dealing with each other at arm's length.

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836 Jointly held property

(1) This section applies if income arises from property held in the names of individuals— (a) who are married to, or are civil partners of, each other, and (b) who live together. (2) The individuals are treated for income tax purposes as beneficially entitled to the income in equal shares. (3) But this treatment does not apply in relation to any income within any of the following exceptions. Exception A Income to which neither of the individuals is beneficially entitled. Exception B Income in relation to which a declaration by the individuals under section 837 has effect (unequal beneficial interests). Exception C Income to which Part 9 of ITTOIA 2005 applies (partnerships). ... Exception E Income consisting of a distribution arising from property consisting of— shares in or securities of a close company to which one of the individuals is beneficially entitled to the exclusion of the other, or such shares or securities to which the individuals are beneficially entitled in equal or unequal shares. “Shares” and “securities” have the same meaning as in section 1117 of CTA 2010. Exception F Income to which one of the individuals is beneficially entitled so far as it is treated as a result of any other provision of the Income Tax Acts as— the income of the other individual, or the income of a third party.

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837 Jointly held property: declarations of unequal beneficial interests

(1) The individuals may make a joint declaration under this section if— (a) one of them is beneficially entitled to the income to the exclusion of the other, or (b) they are beneficially entitled to the income in unequal shares, and their beneficial interests in the income correspond to their beneficial interests in the property from which it arises. (2) The declaration must state the beneficial interests of the individuals in— (a) the income to which the declaration relates, and (b) the property from which that income arises. (3) The declaration has effect only if notice of it is given to an officer of Revenue and Customs— (a) in such form and manner as the Commissioners for Her Majesty's Revenue and Customs may prescribe, and (b) within the period of 60 days beginning with the date of the declaration. (4) The declaration has effect in relation to income arising on or after the date of the declaration. (5) The declaration continues to have effect until such time (if any) as there is a change in the beneficial interests of the individuals in either— (a) the income to which the declaration relates, or (b) the property from which that income arises.

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837A Overview of Chapter

(1) This Chapter provides for the receipts of certain types of company being wound up to be charged to income tax. (2) For provision charging the receipts of such companies to corporation tax, see Chapter 6 of Part 13 of CTA 2010.

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837B Application of Chapter

(1) This Chapter applies if— (a) a company is being or has been wound up by the court in the United Kingdom, and (b) conditions A, B and C are met. (2) Condition A is that the company was, at any time within the period mentioned in subsection (5), lawfully carrying on a business of accepting deposits as— (a) a person of the kind mentioned in paragraph (b) of the definition of “bank” in section 991(2) (persons with permission under Part 4 of FISMA 2000 to accept deposits), ... (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3) Condition B is that the company has permanently ceased to carry on the trade that included the business of accepting deposits (the “deposit-taking trade”). (4) Condition C is that the company is insolvent and— (a) was so when the winding up proceedings started, or (b) became so at any time in the period of 12 months following the day on which those proceedings started. (5) The period referred to in subsection (2) is the period of 12 months ending with the earlier of— (a) the day on which the winding up proceedings started, and (b) the day on which the company permanently ceased to carry on the deposit-taking trade. (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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837C Charge to income tax on winding up receipts

(1) Winding up receipts arising from the deposit-taking trade are chargeable to income tax. (2) Subsection (1) applies in relation to a winding up receipt only so far as its value was not brought into account in calculating the profits of the trade of any period before the permanent cessation of the trade. (3) A “winding up receipt” means (subject to subsection (4)) a sum received by the company or its liquidator after— (a) the start of the winding up proceedings, or (b) if later, the permanent cessation of the deposit-taking trade. (4) The following are not winding up receipts— (a) a sum received on behalf of a person entitled to the sum to the exclusion of the company and its liquidator, and (b) a sum realised by the transfer of an asset required to be valued under section 173 of ITTOIA 2005 (valuation of trading stock on cessation).

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837D Transfer of rights to payment

(1) This section applies if— (a) the company or its liquidator transfers for value to another person the right to receive a sum arising from the deposit-taking trade, and (b) the sum is one which, if received by the company or its liquidator, would be a winding up receipt. (2) If the transfer is at arm's length, this Chapter has effect as if the amount or value of the consideration for the transfer were a winding up receipt arising from the deposit-taking trade. (3) If the transfer is not at arm's length, this Chapter has effect as if the value of the right transferred as between parties at arm's length were a winding up receipt arising from the deposit-taking trade.

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837E Allowable deductions

(1) In calculating the amount on which income tax is charged under this Chapter for a tax year, deductions are allowed in accordance with this section from the amount which would otherwise be chargeable to income tax under this Chapter. (2) A deduction is allowed for the total sum of all losses, expenses and debits within subsection (3) that are incurred during or before the tax year (but subject to subsections (4) and (5)). (3) The losses, expenses and debits within this subsection are those which, if the company carrying on the deposit-taking trade had not permanently ceased to do so— (a) would have been deducted in calculating the profits of the trade for income or corporation tax purposes, or (b) would have been deducted from or set off against the profits of the trade for income or corporation tax purposes. (4) No deduction is allowed if the loss, expense or debit arises directly or indirectly from the cessation itself. (5) A loss, expense or debit is only within subsection (3) if incurred— (a) after the start of the winding up proceedings or, if later, the permanent cessation of the deposit-taking trade, or (b) in the case of a loss, at or before the permanent cessation of the deposit-taking trade. (6) No deduction for an amount is allowed under this section if the amount has already been allowed (whether under this section or under any other provision of the Tax Acts).

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837F Election to carry back

(1) This section applies if a winding up receipt arising from the deposit-taking trade is received in a tax year beginning no later than 6 years after the company permanently ceased to carry on the trade. (2) The company or its liquidator may elect that the income tax chargeable under this Chapter in respect of the receipt is to be charged as if the receipt has been received on the date of the cessation. (3) The election must be made before the end of the period of two years beginning immediately after the end of the tax year in which the receipt is received. (4) If an election is made under this section an assessment to income tax must be made accordingly (regardless of anything in the Income Tax Acts).

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837G Relationship of Chapter with other income tax provisions

If a winding up receipt arising from the deposit-taking trade is chargeable to income tax under this Chapter it is not chargeable to income tax under any other provision.

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837H Interpretation of Chapter

(1) This section applies for the purposes of this Chapter. (2) There is the permanent cessation of a company's trade if— (a) the company ceases to carry on the trade, or (b) the company ceases to be within the charge to corporation tax in respect of the trade, whether or not the trade is in fact ceased. (3) A company is insolvent at any time if at that time— (a) it is unable to pay its debts as they fall due, or (b) the value of its assets is less than the amount of its liabilities (including its contingent and prospective liabilities). (4) “Company” means— (a) a company as defined in section 1(1) of the Companies Act 2006, or (b) an unregistered company as defined in section 220 of the Insolvency Act 1986 or Article 184 of the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)). (5) For the meaning of “deposit-taking trade” and “winding up receipt”, see sections 837B(3) and 837C(3) respectively.

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838 Local authorities and local authority associations

(1) A local authority in the United Kingdom is not liable to income tax in respect of its income. (2) A local authority association in the United Kingdom is not liable to income tax in respect of its income. (3) Tax is repayable as a result of subsection (1) or (2) only if a claim for repayment is made.

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838A Asbestos compensation settlements

(1) The trustees of an asbestos compensation settlement are not liable to income tax in respect of the income of the trustees. (2) In this section “asbestos compensation settlement” means a settlement— (a) the sole or main purpose of which is making compensation payments to or in respect of individuals who have, or had before their death, an asbestos-related condition, and (b) which is made before 24 March 2010 in pursuance of an arrangement within subsection (3). (3) An arrangement is within this subsection if it is— (a) a voluntary arrangement that has taken effect under Part 1 of the Insolvency Act 1986 or Part 2 of the Insolvency (Northern Ireland) Order 1989, (b) a compromise or arrangement that has taken effect under section 425 of the Companies Act 1985, Article 418 of the Companies (Northern Ireland) Order 1986 or Part 26 of the Companies Act 2006, or (c) an arrangement or compromise of a kind corresponding to any of those mentioned in paragraph (a) or (b) that has taken effect under, or as a result of, the law of a country or territory outside the United Kingdom.

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839 Issue departments of the Reserve Bank of India and the State Bank of Pakistan

No liability to income tax arises in respect of the income of the issue department of— (a) the Reserve Bank of India constituted under an Act of the Indian legislature called the Reserve Bank of India Act 1934, or (b) the State Bank of Pakistan constituted under orders made under section 9 of the Indian Independence Act 1947 (c. 30).

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