Section 733 | Income charged under section 731

(1)To find the amount (if any) of the income treated as arising under section 732(2) for any tax year in respect of benefits provided as mentioned in section 732(1)(c) take the following steps.Step 1Identify the amount or value of such benefits received by the individual in the tax year and in any earlier tax years in which section 732 has applied.The sum of those amounts and values is “the total benefits”.Step 2Deduct from the total benefits the total amount of income treated as arising to the individual under section 732(2) for earlier tax years as a result of the relevant transfer or associated operations.The result is “the total untaxed benefits” .... Step 3Identify the amount of any income which—^F1

(a)arises in the tax year to a person abroad, and

(b)as a result of the relevant transfer or associated operations can be used directly or indirectly for providing a benefit for the individual.

(a)the amount deducted at Step 2, and

(b)any other amount which may not be taken into account because of section 743(1) and (2) (no duplication of charges).

That amount is “the relevant income of the tax year” in relation to the individual and the tax year.Step 4Add together the relevant income of the tax year and the relevant income of earlier tax years in relation to the individual (identified as mentioned in Step 3).The sum of those amounts is “total relevant income”.Step 5Deduct from total relevant income—The result is “the available relevant income”.Step 6Compare the total untaxed benefits and the available relevant income.The amount of the income treated as arising under section 732(2) for any tax year is the total untaxed benefits unless the available relevant income is lower.If the available relevant income is lower, it is the amount of income treated as so arising.

(2)Subsection (1) is subject to section 734 (reduction in amount charged: previous capital gains tax charge).

(2A)For the purposes of subsection (1), the amount deducted at Step 2 does not include the amount of any income on which tax was not charged under section 731 by virtue of—^F2

(a)section 735AD(2) (transferor not taxable under benefits charge except where benefit matched to protected foreign-source income etc), or^F2

(b)section 731(1A) (equivalent provision for tax years 2024-25 and earlier).^F2

(2B)For the purposes of subsection (1), if in a tax year—^F2F3

(a)income is treated as arising to an individual under section 721, 728 or 732, and^F2F4

(b)the income is identified as qualifying foreign income on a foreign income claim,^F2

the income is treated for later tax years as not having been charged to income tax ....

(2C)It follows from subsection (2B) that—^F2

(a)in the application of subsection (1) to the individual for subsequent tax years, the amount of the income will be deducted at Step 2 and at paragraph (a) of Step 5, but^F2

(b)in the application of subsection (1) to any other individual for subsequent tax years, the amount of the income will not be deducted at paragraph (b) of Step 5.^F2

(2D)See paragraph 11 of Schedule 10 to FA 2025 (temporary repatriation facility) for special provision about income that is treated as arising under section 732 but that is exempt from income tax under that Schedule.^F2

(2E)See subsections (7) and (8) of section 53 of FA 2026 (offshore income gains: savings relating to amendments made by section 52 of that Act) for special provision about income that is treated as arising under section 732 but that is not chargeable to income tax under subsection (3) of that section.^F5

(3)See also section 740(5) to (7) (which makes provision about relevant income and benefits where relevant transactions include both transactions before 5 December 2005 and transactions after 4 December 2005 and exemptions under this Chapter cease to apply).