Income Tax Act 2007 section 726

Qualifying new residents and remittance-basis users: "foreign" deemed income

Section 726 determines when income deemed to arise to an individual under the transfer of assets abroad rules is treated as "foreign" deemed income, and sets out the consequences for individuals on the remittance basis (up to 2024-25) and qualifying new residents (from 2025-26 onwards).

• Where an individual has deemed income under section 721 (power to enjoy income from transferred assets), that deemed income is classified as "foreign" to the extent that the underlying income of the overseas entity would be relevant foreign income if it belonged to the individual directly.
• For tax years up to and including 2024-25, if the individual was on the remittance basis, the foreign deemed income is treated as relevant foreign income and taxed only when remitted to the UK, with a modified version of the remittance basis charging rules applied.
• From 2025-26 onwards, qualifying new residents who are entitled to claim relief under section 845A of ITTOIA 2005 may identify foreign deemed income as "qualifying foreign income" in their foreign income claim, as set out in the table in section 845H of ITTOIA 2005.
• For the remittance basis rules, the underlying income of the overseas entity that would be relevant foreign income is treated as deriving from the foreign deemed income, creating a link between the actual overseas income and the deemed amount for remittance tracking purposes.

---