Income Tax (Trading and Other Income) Act 2005 section 643K

Cases where deemed income attributed to recipient of onward gift

Section 643K deals with situations where an onward payment from a settlement is received by someone who is either non-UK resident or who is UK resident but uses the remittance basis of taxation, and sets out how the deemed income is attributed so that the onward gift rules can continue to apply down the chain of recipients.

• Where the recipient of an onward payment is non-UK resident (either in the gift year or in a later matching year), the payment is treated as deemed income of that recipient so the onward gift rules can apply again to any further payments they make
• Where the recipient is UK resident but uses the remittance basis, any part of the onward payment not remitted to the UK in the charging year is similarly treated as deemed income, allowing the onward gift rules to continue applying
• Where only part of the onward payment is remitted to the UK, section 643J taxes the remitted portion whilst section 643K ensures the unremitted portion remains within the onward gift rules for future tracking
• All deemed income amounts under this section are reduced by any amounts already treated as the settlor's income under section 643L, preventing the same income from being taxed twice