INTM601760 | Transfer of assets abroad: The benefits charge: Modification of steps formula

The Steps formula is specifically modified where relevant transactions include both pre-5 December 2005 transactions and post-4 December 2005 transactions, where the provisions at INTM602840 apply – that is, exemptions in ITA07/S739 are in point.

Where the provisions apply, the modifications are:

• in determining the relevant income of an earlier tax year for Step 4, it does not matter whether that year was a year for which the individual was not liable to a benefits charge because of an exemption; in other words, the relevant income of that year is taken into account;

• for the purpose of Step 1, a benefit received by the individual in or before the tax year 2005-2006 is to be left out of account;

• but in the case of a benefit received in the tax year 2005-2006, the preceding bullet only applies to so much of the benefit as, on a time apportionment basis, fell to be enjoyed in any part of the year that fell before 5 December 2005.

The example in INTM601800 includes the operation of this modification.