INTM600660 - Transfer of assets abroad: The income charge: General conditions - entitlement to capital sum
Source: gov.uk (2025-04-07)


The essential conditions required for the operation of the income charge – entitlement to capital sum may, in broad terms, be summarised as follows:
- there is a transfer of assets (see INTM600220 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm600220))
- an individual resident in the UK in the year of potential charge has made (or has been associated with) such a transfer (see INTM600460 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm600460))
- as a result of a relevant transfer (INTM600220 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm600220)), one or more associated operations (INTM600300 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm600300)), or a relevant transfer and one or more associated operations, income has become the income of a person abroad
- the capital receipt conditions are met in respect of the individual in the tax year (see INTM601020 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm601020)).
There is no equivalent in the provisions for this charge to the condition in the power to enjoy charge that the income would be chargeable to income tax if it were the individual’s and received by the individual in the UK. The power to enjoy provision is referred to in INTM600640 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm600640).

This charge operates without regard to the criteria of ‘power to enjoy’. All the tests in the ‘income charge – power to enjoy’ relate to what is happening, or what might happen now or in the future, to the income. However, this charge does not, for the purpose of attracting liability, look at income. Here, the test of liability is whether the individual receives or is entitled to receive any ‘capital sum’, the payment of which is in any way connected with the transfer or any associated operation (the capital receipt condition INTM601020 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm601020)). This has nothing in common with the test of whether the individual has power to enjoy income.

It should be noted that no liability can arise under this charge for a tax year before receipt or entitlement to a capital sum. But where there is such a receipt or entitlement, liability continues for any subsequent year for which there is income (there need be no further receipt of a capital sum). However, if entitlement to a capital sum completely ends and there are no other grounds for an income charge, liability under this charge will not normally be extended beyond the tax year in which that entitlement ceases.

Where this charge applies for the first time, it is the whole of any income of the tax year that is potentially chargeable, not merely income arising from the date of receipt or entitlement to the capital sum. The same is the case for any tax year where entitlement ends; the whole of any income of the tax year is potentially chargeable.

For years prior to 2025-2026, if the individual who is subject to the income charge was not UK domiciled for the tax year, see INTM601960 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm601960) for the effect this may have on liability to income tax on the income treated as arising under the income charge. For the years 2017-2018 to 2024-2025, special rules were introduced in respect of the income charge for non-UK domiciled and UK deemed domiciled individuals. These rules are covered in INTM603180 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm603180) onwards.