Revenue Note for Guidance

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Revenue Note for Guidance

CHAPTER 4

Income tax: basis of assessment under Cases III, IV and V

Overview

Chapter 4 of Part 4 sets out the rules relating to the basis of assessment to income tax under Cases III, IV and V of Schedule D. The Chapter also sets out special rules relating to the Case III basis of assessment, including the remittance basis, certain anti-avoidance rules relating to this basis and rules relating to income arising from certain UK possessions.

70 Case III: basis of assessment

Summary

Income/profits chargeable to income tax under Case III of Schedule D is/are deemed to issue from a single source. However, this single source provision shall not be taken to mean that an “excluded amount”, i.e. foreign rental losses, can be included in the computation of such income/profits. With the exception of income from foreign securities and possessions for which subsection (4) and sections 71 and 73 provide special rules, income tax under Case III is computed on the full amount of the income/profits arising within the year of assessment without deduction. Where income tax is to be computed by reference to the amount of income actually received in the State rather than on the income arising, income tax under Case III of Schedule D is computed on the full amount of the income/profits actually received in the year of assessment (this is known as “the remittance basis of assessment”).

Details

(1) For the purposes of ascertaining liability to income tax, income/profits chargeable to tax under Case III of Schedule D is/are treated as issuing from a single source.

(1A)(a) An “excluded amount” is the amount of a deficiency (or loss) computed in respect of foreign rental property.

(1A)(b) The single source provision in section 70(1) cannot be taken to mean that a loss arising from foreign rental property, i.e. an “excluded amount” as defined, may be taken into account in the computation of income or profits chargeable under Case III of Schedule D.

(2) & (3) Income/profits chargeable to tax under Case III of Schedule D is/are, subject to the provisions applicable to income arising from foreign securities or possessions in subsection (4) and sections 71 and 73, chargeable on the full amount of such income/profits arising in the year of assessment without any deduction. No deductions are available, therefore, in respect of Case III income which arises in the State.

(4) Where Case III income is computed by reference to the amount received in the State, the amount so chargeable is the income/profits actually received in the State in the year of assessment.

Relevant Date: Finance Act 2019