INTM600640 - Transfer of assets abroad: The income charge: General conditions - power to enjoy

The essential conditions required for the operation of the income charge – power to enjoy may, in broad terms, be summarised as follows:

• there is a transfer of assets (see INTM600220)
• an individual resident in the UK in the year of potential charge has made (or has been associated with) such a transfer (see INTM600460)
• as a result of the transfer, by itself or in conjunction with associated operations, income becomes payable to persons resident or, in the case of an individual, domiciled outside the UK (see INTM600360)
• the individual who is the subject of the potential charge must have power in the tax year to enjoy - now or later - income of a person abroad as a result of the transfer alone or together with associated operations (see INTM600860).

A further condition for the purpose of this charge is that the income in question is such that it would be chargeable to income tax if it were the individual’s and received by the individual in the UK.

If the individual who is subject to the income charge is not UK domiciled for the tax year, see INTM601960 for the effect this may have on liability to income tax on the income treated as arising under the income charge. For the years 2017-2018 onwards, new rules have been introduced in respect of the income charge for non-UK domiciled and UK deemed domiciled individuals. These new rules are covered in INTM603180 onwards.

The amount on which liability to the income charge may arise may also be affected by ITA07/S724, which limits the charge when a benefit is provided to the individual out of the income of the person abroad. This is considered further in INTM600980.