INTM602200 - Transfer of assets abroad: Non-domiciled individuals taxation up to 5 April 2025: The benefits charge - relevant income and benefits relating to foreign deemed income - detail
Source: gov.uk (2025-04-07)


This page gives the detail of how the ordering rule outlined in INTM602180 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm602180) works. It proceeds by looking at relevant income and benefits determined for the purpose of the ‘Steps’ taken in arriving at the potential total chargeable amount (see INTM601740 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm601740)).

There are six parts to the rule as follows.

One

First, all the benefits mentioned in Step 1 are placed in the order in which they were received by the individual starting with the earliest received.

Two

From the benefits, deduct any benefit that gives rise to a charge in respect of capital gains or offshore income gains as described in ITA07/S734(1)(b) and (d) (see INTM601520 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm601520)).

Three

Take the relevant income of each tax year starting with the earliest tax year and place the income in date order. In doing this, first take income that is not foreign income and then repeat with foreign income. The order will be the earliest income first. Income is ‘foreign’ for this purpose if it would be relevant foreign income if it were the individual’s. In repeating this exercise for each year, relevant income of the earliest tax year will be relevant income of the first tax year after the last tax year in relation to which the calculation was performed. These may not be consecutive years.

Four

Deduct from the income any income that has already been taken into account for the transfer of assets provisions. These amounts may not be taken into account because of the ‘no duplication of charges’ provisions in ITA07/S743(1) or (2) (see INTM602360 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm602360)); but any income charged to income tax under the benefits provisions on the individual is not deducted. If income is potentially treated as that of a transferor who is a remittance basis user, but for the purpose of the income charge the income is not remitted, such income is treated as relevant income for the purpose of the benefits charge. If this income is, having been matched for the purpose of the benefits charge, then remitted, and could be treated as income of the transferor under the income charge, ITA07/S743(1) prevents a charge arising.

Five

Next, place any income treated as arising to the individual under the transfer of assets benefits charge in the order in which it is treated as arising starting with the earliest.

Six

Finally, treat the income listed in Five as related to the benefits and relevant income by matching that income with the benefits and the relevant income in the orders mentioned in One, Three and Five above.

An example illustrating the provisions and methodology described in INTM602160 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm602160) to INTM602200 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm602200) is set out in INTM602220 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm602220).