Income Tax Act 2007 section 735AG

Deduction allowed for previous settlements charge

Section 735AG provides relief from double taxation where the same benefit has been taxed both under the transfer of assets abroad rules and under the settlements code for protected foreign-source income.

• Where a benefit received by a non-transferor under the transfer of assets abroad rules is also treated as income under the settlements code (section 643A of ITTOIA 2005), a deduction is available to prevent double counting.
• For any tax year after the year in which income is treated as arising under the settlements code, the deemed income under the transfer of assets abroad charge is reduced by the amount already taxed under the settlements code.
• The reduction works by treating the "total untaxed benefits" figure used in the transfer of assets abroad calculation as reduced by the amount of settlements income already charged.
• For the tax years 2018-19 to 2024-25, the relief also covers income treated as arising under the old onward gift provisions in sections 643J and 643L of ITTOIA 2005.