Income Tax Act 2007 section 735AB

"Protected foreign-source income" and "transitionally protected income"

Section 735AB defines two key categories of historic foreign income — "protected foreign-source income" and "transitionally protected income" — that are relevant to the transitional rules for the transfer of assets abroad provisions following the abolition of the remittance basis from 2025-26.

• Protected foreign-source income is income of the person abroad that would have been taxed on the settlor under the transfer of assets abroad rules during 2017-18 to 2024-25, but was shielded because the settlor was a remittance basis user with non-UK domicile status during those years.
• Transitionally protected income is income that was actually attributed to the settlor before 2017-18 under the transfer of assets abroad rules but was never remitted to the UK before 2017-18, and retained its protected status throughout 2017-18 to 2024-25.
• Both definitions are linked to a specific relevant transfer of assets abroad and apply for the purposes of the transitional provisions in sections 735AA to 735AF.
• Whether income was "remitted to the United Kingdom" before 2017-18 is determined by the remittance basis rules in Chapter A1 of Part 14, read together with the applicable transfer of assets abroad charging provisions.