Income Tax Act 2007 section 745

Rates of tax applicable to income charged under sections 720 and 727 etc.

Section 745 deals with the rates of income tax that apply when income is deemed to arise to a UK individual under the transfer of assets abroad rules, and provides relief from double taxation where the underlying income has already borne tax.

• Where the underlying offshore income has already borne income tax at the basic rate (or the savings starting rate when above 0%), the deemed income charged under sections 720 or 727 is not taxed again at that rate, to the corresponding extent.
• Equivalent relief applies where a Scottish rate or Welsh basic rate at or below the basic rate is in point — no charge arises at those devolved rates if the underlying income has already borne tax at the basic rate.
• These relieving provisions do not apply where a benefit has been provided out of the income of a person abroad and is charged in the year of receipt under section 724(2).
• To the extent the relieving provisions do not apply, the deemed income is treated as dividend income (and taxed at dividend rates) if the underlying offshore income would itself be dividend income were it the individual's own income.