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

Protected foreign-source income and transitional trust income not to be taxed elsewhere in Chapter

Section 643ZB ensures that protected foreign-source income and transitional trust income arising under a settlement are not subject to double taxation under other provisions within the settlements chapter.

• Protected foreign-source income and transitional trust income are excluded from the rules that treat settlement income as the settlor's income (under sections 624(1) and 629(1)).
• These types of income may instead be treated as income arising under the settlement from the 2025–26 tax year onwards, under the specific rules in section 648(3) to (5).
• The definition of "income" used in the capital sums provisions (sections 635, 636 and 637) is narrowed so that it does not include protected foreign-source income or transitional trust income.
• The overall effect is to ring-fence these two categories of income from the wider settlements anti-avoidance rules, preventing them from being taxed twice within the same chapter.