Section 735: relevant income and benefits relating to foreign deemed
For the purposes of section 735—
place the benefits mentioned in Step 1 in the order in which
they were received by the individual (starting with the
earliest benefit received),
deduct from those benefits so much of any benefit within
section 734(1)(b) as gives rise as mentioned in section
734(1)(d) to chargeable gains,
place the income mentioned in Step 3 for the tax years
mentioned in Step 4 (“the relevant income”) in the order
determined under subsection (3),
deduct from that income any income that may not be taken
into account because of section 743(1) or (2) (no duplication
place the income treated under section 732(2) as arising to the
individual in respect of the benefits in the order in which it is
treated as arising (starting with the earliest income treated as
treat the income mentioned in paragraph (e) as related to—
the relevant income,
by matching that income with the benefits and the relevant
income (in the orders mentioned in paragraphs (a), (c) and
In subsection (1) references to a step are to a step in section 733(1).
The order referred to in subsection (1)(c) is arrived at by taking the
Find the relevant income for the earliest tax year (of the tax years
referred to in subsection (1)(c)).
Place so much of that income as is not foreign in the order in which
it arose (starting with the earliest income to arise).
After that, place so much of that income as is foreign in the order in
which it arose (starting with the earliest income to arise).
For this purpose, read references to the relevant income for the
earliest tax year as references to the relevant income for the first tax
year after the last tax year in relation to which those Steps have been
For the purposes of subsection (3) relevant income is “foreign” where
it would be relevant foreign income if it were the individual’s.
Subsection (1)(d) does not apply if the income may not be taken into
account because the individual has been charged to income tax
under section 731 by reason of the income.”