Income Tax (Trading and Other Income) Act 2005 section 627

Exceptions for certain types of income

Section 627 carves out specific types of income from the general rule in section 624 that treats settlement income as the settlor's income where the settlor retains an interest. These exceptions cover marriage or civil partnership breakdown settlements, commercial and charitable payments, pension benefits, and settlements made by non-individual settlors.

• Income arising under a settlement made by one spouse or civil partner for the other after divorce, annulment, or permanent separation is not treated as the settlor's income
• Annual payments made by an individual for genuine commercial reasons connected with their trade, profession or vocation are excluded from the settlor-interested rules
• Qualifying gift aid donations and benefits under relevant pension schemes (including registered schemes, overseas government schemes, and certain welfare reform pension arrangements) are also exempt
• Settlement income originating from a settlor that was not an individual (for example, a company or trust) falls outside the section 624 rule entirely