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Income Tax (Trading and Other Income) Bill


Income Tax (Trading and Other Income) Bill
Part 5 — Miscellaneous income
Chapter 6 — Beneficiaries’ income from estates in administration

296

 

676     

Apportionments

(1)   

Such apportionments as are just and reasonable are to be made for the

purposes of this Chapter if—

(a)   

the part of a residuary estate in which an interest within any of the

provisions specified in subsection (2) subsists does not wholly

5

correspond with the part in which another such interest held

successively subsists, or

(b)   

one of those interests is in the whole of the residuary estate and the

other is only in part of it.

(2)   

The provisions are—

10

section 671 (successive absolute interests),

section 672 (successive interests: assumed income entitlement of holder of

absolute interest following limited interest),

section 673 (successive interests: payments in respect of limited interests

followed by absolute interests),

15

section 674 (successive interests: holders of limited interest), and

section 675 (basic amount of estate income: successive limited interests).

Relief where foreign estates have borne UK income tax

677     

Relief where UK income tax borne by foreign estate: absolute interests

(1)   

This section applies if—

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(a)   

an estate is a foreign estate in relation to a tax year,

(b)   

United Kingdom income tax has been charged on a person for the tax

year on estate income treated as arising from the estate under section

652 (estate income: absolute interests in residue), and

(c)   

United Kingdom income tax has already been borne by part of the

25

aggregate income of the estate for the tax year.

(2)   

If the person makes a claim under this section, the income tax charged on the

person on that estate income is to be reduced by an amount equal to—equation: cross[char[T],over[char[A],char[B]]]

   

where—

T is the income tax charged on the person,

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A is so much of the aggregate income of the estate as has already borne

United Kingdom income tax for the tax year, and

B is the aggregate income of the estate for the tax year.

678     

Relief where UK income tax borne by foreign estate: limited and

discretionary interests

35

(1)   

This section applies if—

(a)   

an estate is a foreign estate in relation to a tax year,

(b)   

United Kingdom income tax has been charged on a person for the tax

year on estate income from the estate treated as arising under—

(i)   

section 654 (estate income: limited interests in residue), or

40

 
 

Income Tax (Trading and Other Income) Bill
Part 5 — Miscellaneous income
Chapter 6 — Beneficiaries’ income from estates in administration

297

 

(ii)   

section 655 (estate income: discretionary interests in residue),

and

(c)   

United Kingdom income tax has already been borne by part of the

aggregate income of the estate for the tax year.

(2)   

If the person makes a claim under this section, the income tax charged on the

5

person on that estate income is to be reduced by an amount equal toequation: cross[char[T],over[plus[char[A],minus[char[C]]],plus[char[B],minus[char[C]]]]]

   

where—

T is the income tax charged on the person,

A is so much of the aggregate income of the estate as has already borne

United Kingdom income tax for the tax year,

10

B is the aggregate income of the estate for the tax year, and

C is the amount of United Kingdom income tax already borne by the

aggregate income of the estate for the tax year.

General

679     

Income from which basic amounts are treated as paid

15

(1)   

The part of the aggregate income of the estate from which a basic amount is

treated as paid is determined by applying assumptions A and B in that order.

(2)   

Assumption A is that if there are different persons with interests in the residue

of the estate, payments in respect of their basic amounts are paid out of the

different parts of the aggregate income of the estate in such proportions as are

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just and reasonable for their different interests.

(3)   

Assumption B is that payments are made from those parts in the following

order—

(a)   

income bearing income tax at the basic rate,

(b)   

income bearing income tax at the lower rate, and

25

(c)   

income bearing income tax at the dividend ordinary rate.

(4)   

If some, but not all, of the aggregate income of the estate is income treated

under section 680 as bearing income tax, assumption C is applied before

assumptions A and B.

(5)   

Assumption C is that the basic amount is paid from income that is not within

30

section 680 before it is paid from income within that section.

(6)   

Assumptions A and B then apply—

(a)   

first to determine the part of the income not within that section from

which the basic amount is paid, and

(b)   

then to determine the part of the income within that section from which

35

the basic amount is paid.

680     

Income treated as bearing income tax

(1)   

This section has effect for the purposes of—

 
 

Income Tax (Trading and Other Income) Bill
Part 5 — Miscellaneous income
Chapter 6 — Beneficiaries’ income from estates in administration

298

 

section 663 (the applicable rate for grossing up basic amounts of estate

income),

section 670 (applicable rate for determining assumed income entitlement

(UK estates)), and

section 679 (income from which basic amounts are treated as paid).

5

(2)   

If the aggregate income of the estate includes a sum within subsection (3) or (4),

the sum is treated as bearing income tax at the rate specified for it in that

subsection.

(3)   

The following sums are treated as bearing income tax at the dividend ordinary

rate—

10

(a)   

a sum charged under Chapter 3 of Part 4 (dividends etc. from UK

resident companies etc.), or

(b)   

a sum that is part of the aggregate income of the estate because of

falling within—

(i)   

section 664(2)(c) (stock dividends), or

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(ii)   

section 664(2)(d) (release of loan to participator in close

company where debt due from personal representatives).

(4)   

A sum that is part of the aggregate income of the estate because of falling

within section 664(2)(e) (gains from life insurance contracts etc.) is treated as

bearing income tax at the lower rate.

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(5)   

Income tax treated as borne under section 656(3) or 657(4) (gross amount of

estate income treated as bearing tax at the applicable rate) is not repayable so

far as the basic amount of the estate income in question is paid from sums

within this section.

681     

Transfers of assets etc. treated as payments

25

(1)   

For the purposes of this Chapter—

(a)   

a transfer of assets, or

(b)   

the appropriation of assets by personal representatives to themselves,

   

is treated as the payment of an amount equal to the assets’ value at the date of

transfer or appropriation.

30

(2)   

The set off or release of a debt is treated for the purposes of this Chapter as the

payment of an amount equal to it.

(3)   

If at the end of the administration period—

(a)   

there is an obligation to transfer assets to any person, or

(b)   

personal representatives are entitled to appropriate assets to

35

themselves,

   

an amount equal to the assets’ value at that time is treated as payable then for

the purposes of this Chapter.

(4)   

If at the end of the administration period—

(a)   

there is an obligation to release or set off a debt owed by any person, or

40

(b)   

personal representatives are entitled to release or set off a debt in their

own favour,

   

a sum equal to the debt is treated as payable then for the purposes of this

Chapter.

 
 

Income Tax (Trading and Other Income) Bill
Part 5 — Miscellaneous income
Chapter 7 — Annual payments not otherwise charged

299

 

682     

Assessments, adjustments and claims after the administration period

(1)   

This subsection applies if after the administration period ends it is apparent

that a person is liable for income tax on estate income for any tax year who

previously appeared not to be so liable or to be liable for tax on a lesser amount.

(2)   

If subsection (1) applies—

5

(a)   

the person may be assessed and taxed for the tax year, and

(b)   

any relief or additional relief to which the person may be entitled for

the tax year is to be allowed if a claim is made.

(3)   

This subsection applies if after the administration period ends it is apparent

that a person who previously appeared to be liable for income tax on estate

10

income for any tax year is not so liable or is liable for tax on a lesser amount.

(4)   

If subsection (3) applies—

(a)   

all necessary adjustments and repayments of income tax for the tax year

are to be made, and

(b)   

if the person has been allowed relief which exceeds the relief that could

15

have been given by reference to the amount actually charged for the tax

year, income tax is charged on the person for that year under this

subsection on the excess.

(5)   

An assessment or adjustment made for the purposes of this Chapter or a claim

made as a result of this Chapter may be made after the end of the period

20

otherwise allowed if it is made on or before the third anniversary of the normal

self-assessment filing date for the tax year in which the administration period

ends.

Chapter 7

Annual payments not otherwise charged

25

683     

Charge to tax on annual payments not otherwise charged

(1)   

Income tax is charged under this Chapter on annual payments that are not

charged to income tax under or as a result of any other provision of this Act or

any other Act.

(2)   

Subsection (1) does not apply to annual payments that would be charged to

30

income tax under or as a result of another provision but for an exemption.

(3)   

The frequency with which payments are made is ignored in determining

whether they are annual payments for the purposes of this Chapter.

(4)   

For exemptions, see in particular—

(a)   

sections 727 to 730 (certain annual payments by individuals),

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(b)   

section 731 (periodical payments of personal injury damages),

(c)   

section 732 (compensation awards),

(d)   

section 734 (payments from trusts for injured persons),

(e)   

sections 735 to 743 (health and employment insurance payments),

(f)   

sections 744 to 747 (payments to adopters),

40

(g)   

section 748 (payments by persons liable to pool betting duty),

(h)   

sections 757 to 767 (interest and royalty payments), and

(i)   

section 776 (scholarship income).

 
 

 
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