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

"Protected foreign-source income" and "transitional trust income"

Section 643ZA defines two categories of historic trust income — "protected foreign-source income" and "transitional trust income" — that are relevant to the settlements code following the abolition of the remittance basis from 2025-26.

• Protected foreign-source income is foreign income arising under a settlement in the tax years 2017-18 to 2024-25 that qualified as protected foreign-source income under the rules then in force (former section 628A).
• Transitional trust income is foreign income arising under a settlement in the tax years 2008-09 to 2016-17 that retained its status as transitional trust income throughout the tax years 2017-18 to 2024-25 under the rules then in force (former section 628C).
• For the purpose of identifying both categories of income, the normal rule that treats foreign settlement income as arising only when it is remitted to the UK is disregarded — the income is treated as having arisen in the year it actually arose.
• These definitions are used elsewhere in Chapter 5 to determine how such historic trust income is taxed from 2025-26 onwards, now that the remittance basis has been removed.