Income and Corporation Taxes Act 1970

456 Ascertainment of undistributed income: interest paid by trustees

(1) Paragraph (b) of section 455 above shall apply to any interest paid by the trustees of the settlement subject to the provisions of this section.

(2) If no sums within paragraph (a) of that section were paid to any person other than the settlor, or the wife or husband of the settlor, the whole of the interest shall be excluded from the said paragraph (b).

(3) If any sum was so paid, there shall be excluded from the said paragraph (b) a fraction of the interest where—

• A is the whole of the income arising under the settlement in the year of assessment, less the sums referred to in the said paragraph (b) apart from this section, and

• B is so much of the sums within the said paragraph (a) as is paid to persons other than the settlor, or the wife or husband of the settlor.

(4) This section shall not apply to interest in respect of which relief from tax at the standard rate is allowable under any provision of the Income Tax Acts or to interest payable to the settlor or the wife or husband of the settlor (if living with the settlor).

(5) Nothing in this section shall be construed as affecting the liability to tax of the person receiving or entitled to the interest.