Income Tax (Trading and Other Income) Act 2005

280 (1) Amend section 689B (order in which expenses to be set against income: trust management expenses) as follows.

(2) In subsection (2) for paragraphs (za) to (c) substitute—

“(a) so much of the income of the trustees as is income chargeable under Chapter 3 of Part 4 of ITTOIA 2005 (dividends etc. from UK resident companies etc.);

(b) income treated as arising to the trustees under Chapter 5 of that Part (stock dividends from UK resident companies); or

(c) income chargeable under Chapter 6 of that Part (release of loan to participator in close company).”

(3) In subsection (2A) for “income to which section 1A applies” to the end substitute “—

(a) income chargeable under Chapter 4 of Part 4 of ITTOIA 2005 (dividends from non-UK resident companies); or

(b) a relevant foreign distribution chargeable under Chapter 8 of Part 5 of that Act (income not otherwise charged).”

(4) After that subsection insert—

“(2B) In subsection (2A) “relevant foreign distribution” means any distribution of a company not resident in the United Kingdom which—

(a) is not chargeable under Chapter 4 of Part 4 of ITTOIA 2005, but

(b) would be chargeable under Chapter 3 of that Part if the company were resident in the United Kingdom.”