Income Tax Act 2007 section 814

Meaning of "disregarded transaction income"

Section 814 defines "disregarded transaction income" — a category of income earned by non-UK residents through UK-based brokers or investment managers that can be excluded from UK income tax liability, provided certain independence conditions are satisfied.

• A non-UK resident carrying on business in the UK through a broker or investment manager may have certain transaction income treated as "disregarded transaction income", meaning it falls outside the charge to UK income tax
• For income to qualify, it must be "transaction income" (income arising from the business activity relating to the transaction, or from property or rights resulting from the transaction) and the relevant independence conditions must be met — the "independent broker conditions" for brokers, or the "independent investment manager conditions" for investment managers
• "Transaction income" covers both income from the part of the non-UK resident's business that relates to the transaction and income from property or rights used, held, or managed by the broker or investment manager on the non-UK resident's behalf as a result of the transaction
• The disregarded transaction income treatment does not apply to income chargeable under section 171(2) of the Finance Act 1993, which deals with profits from the underwriting business of a Lloyd's member