Income Tax Act 2007 section 502

Meaning of "untaxed income" in section 501

Section 502 defines what counts as "untaxed income" for the purposes of the rules in section 501 concerning non-UK resident beneficiaries of settlements.

• A beneficiary's income is "untaxed" where it escapes income tax because the beneficiary has been non-UK resident or is treated as resident outside the UK under a double taxation agreement
• Where a non-UK resident beneficiary's tax liability is capped under the special rules in Chapter 1 of Part 14, any "disregarded income" under those rules is also treated as untaxed income
• However, disregarded income is not treated as untaxed if income tax has already been deducted from it or treated as deducted from or paid in respect of it
• The definition mirrors the equivalent rule for trustees in section 487, but applies to beneficiaries instead