Income Tax Act 2007 section 721A

Meaning of "protected foreign-source income" in section 721

Section 721A defines what counts as "protected foreign-source income" for the purposes of the transfer of assets abroad rules in section 721, specifically where an individual has the power to enjoy income arising to a person abroad.

• Foreign-source income held through a non-UK resident trust can qualify as protected if the settlement was created before the individual became UK domiciled or deemed domiciled, and no additional property or income has been added to the trust since the later of 6 April 2017 or the creation of the settlement.
• Income held through a company in which trust trustees are participators can also qualify as protected, provided the same domicile and non-tainting conditions are met and the individual's power to enjoy the income arises from the trustees' participation in the company.
• Adding value to property already within the settlement counts as directly providing property for the purposes of the settlement, which can disqualify the income from protected status.
• A participator is defined by reference to section 454 of CTA 2010, and deemed domicile is determined under section 835BA of ITA 2007.