INTM600400 - Transfer of assets abroad: General conditions: Income

Before any charge can arise under either the income or benefits charge, income must become payable to a person abroad as a result of:

• the transfer,
• one or more associated operations, or
• the transfer and one or more associated operations.

However, no specific meaning is given to ‘income’ for this purpose within the provisions.

Income therefore must be given its ordinary meaning. It is not confined to the income of the person abroad to whom a transfer of assets is made; there may be other persons to whom income arises as a result of associated operations. Regard must be had to the income of each person abroad that is connected with the transfer or another relevant transaction.

All forms of income are included as well as certain items treated as income like offshore income gains, chargeable event gains on certain life assurance policies and accrued income scheme charges. More detail on these and other types of specific income can be found at INTM601100 onwards. Income includes both trading and investment income.

In general, an item will only be considered as income for this purpose if it would be income for income tax purposes. This is because the charge to tax under the transfer of assets provisions is a charge to income tax, so the context suggests that income must refer to items that would be income for that purpose.

As well as items that are specifically treated as income, there are also items treated as income for some income tax purposes but which may not be income of a person abroad for the purpose of transfer of assets. In considering whether any item is income, it is relevant to consider its character in the hands of the person who actually receives it. In the absence of a specific provision that identifies a particular item as income for all UK tax purposes, or specifically for the purpose of the transfer of assets legislation, if it is not income in the hands of the person abroad who actually receives it then it is unlikely to be income for the purpose of transfer of assets. An example of this is a scrip or stock dividend paid by a UK company: see INTM601160.