INTM600780 | Transfer of assets abroad: The income charge: The individual - residence position

In order to be chargeable under the income charge for a particular tax year, for the years up to and including 2012-2013 the individual must be ordinarily resident in the UK for the year in question.

Following changes made by the Finance Act of 2013 for years from 2013-2014 onwards, with the exception of individuals affected by the transitional arrangements (see INTM604540), an individual will be chargeable under the income charge for a particular tax year if they are resident in the UK for the year in question.

The issue of ordinary residence is covered in more detail at INTM604540.

However, there is one important additional point about ordinary residence / residence that affects the income charge. The individual does not need to have been ordinarily resident / resident in the UK when the transfer of assets or associated operations took place. See ITA07/721(5)(b) and ITA07/728(3)(b).

This was clarified by an amendment to the income charge by FA97/S81, and it applies irrespective of when the transfer or associated operations took place, but only in relation to income arising on or after 26 November 1996.

What this means is that, where the individual was not ordinarily resident in the UK at the time when the relevant transfers were made, only income arising on or after 26 November 1996 can be taken into account in arriving at the income charge.

If an individual is outside the income charge in respect of income arising before 26 November 1996 because of not being ordinarily resident in the UK at the time the relevant transfer was made, that individual will not be charged under the benefits charge.