# Finance Act 2025, Paragraph 40

Extent: E+W+S+N.I.

(1) Section 733 (income charged under section 731) is amended as follows.
(2) In subsection (1), in Step 2, omit the words from “except that” to “for an earlier tax year”.
(3) After subsection (2) insert—
“(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—
(a) section 735AD(2) (transferor not taxable under benefits charge except where benefit matched to protected foreign-source income etc), or
(b) section 731(1A) (equivalent provision for tax years 2024-25 and earlier).
(2B) For the purposes of subsection (1), if in a tax year—
(a) income is treated as arising to an individual under section 732(2), and
(b) the income is identified as qualifying foreign income on a foreign income claim,
the income is treated for later tax years as not having been charged to income tax under section 731.
(2C) It follows from subsection (2B) that—
(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
(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.
(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.”

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Source: https://www.legislation.gov.uk/ukpga/2025/8/schedule/12/paragraph/40 (the official version)
Page: https://openlegislation.uk/finance-act-2025/schedule-12/paragraph-40
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.