Income Tax (Trading and Other Income) Act 2005 section 858

Resident partners and double taxation agreements

Section 858 ensures that a UK resident partner's share of income from a foreign firm remains subject to UK income tax, even where a double taxation agreement exempts the firm's income from UK tax.

• The section applies where a UK resident is a partner in a firm that either resides outside the UK or carries on a trade controlled and managed outside the UK, and the firm's income is relieved from UK income tax under a double taxation agreement
• Despite any relief granted to the firm under a double taxation agreement, the UK resident partner remains personally liable to income tax on their share of the firm's income
• The section only removes the exemption that would otherwise apply under the double taxation agreement — it does not deny other forms of relief, such as foreign tax credit relief
• For the purposes of this section, a member of a firm includes any person who is entitled to a share of the firm's income, not just formal partners