Income Tax Act 2007 section 729A

Meaning of "protected foreign-source income" in section 728

Section 729A defines what counts as "protected foreign-source income" for the purposes of the transfer of assets abroad rules, specifically where a non-UK domiciled individual receives capital sums connected with relevant transactions involving persons abroad.

• Income of a person abroad qualifies as protected foreign-source income if it would be relevant foreign income were it the individual's own, and the person abroad is either a non-UK resident settlement trustee or a company connected to such a trustee.
• Where the person abroad is a trustee, the settlement must have been created at a time when the individual was not domiciled (or, for settlements created on or after 6 April 2017, not deemed domiciled) in the UK, and the settlement must not have been tainted by contributions made while the individual was domiciled or deemed domiciled.
• Where the person abroad is a company, the trustees of a qualifying settlement must be participators in that company (or in a chain of companies leading to it), and the same domicile and tainting conditions apply to the settlement.
• The tainting rules in section 721B apply to determine whether property or income has been provided to the settlement during a period when the individual was domiciled or deemed domiciled in the UK, and adding value to settlement property counts as a direct provision of property.

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