Income Tax (Trading and Other Income) Act 2005

619 Charge to tax under Chapter 5

(1) Income tax is charged on—

(a) income which is treated as income of a settlor as a result of section 624 (income where settlor retains an interest),

(b) income which is treated as income of a settlor as a result of section 629 (income paid to unmarried minor children of settlor),

(c) capital sums which are treated as income of a settlor as a result of section 633 (capital sums paid to settlor by trustees of settlement), and

(d) capital sums which are treated as income of a settlor as a result of section 641 (capital sums paid to settlor by body connected with settlement).

(2) The charge on the settlor under subsection (1)(a) or (b) above operates on distribution income by treating the income as if it were income to which section 1A of ICTA (application of lower rate to income from savings and distributions) applies as a result of subsection (2)(b) of that section (income chargeable under Chapter 3, 5 or 6 of Part 4: dividends etc. from UK resident companies etc. and release of loan to participator in close company).

(3) In subsection (2) “distribution income” means income which represents income received by the trustees of the settlement, or any other person to whom it is payable, which is—

(a) income chargeable under Chapter 3 of Part 4 (dividends etc. from UK resident companies etc.),

(b) income chargeable under Chapter 4 of Part 4 (dividends from non-UK resident companies),

(c) income chargeable under Chapter 5 of Part 4 (stock dividends from UK resident companies),

(d) income chargeable under Chapter 6 of Part 4 (release of loan to participator in close company), or

(e) a relevant foreign distribution chargeable under Chapter 8 of this Part (income not otherwise charged).

(4) In subsection (3) “relevant foreign distribution” means any distribution of a non-UK resident company which—

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

(b) would be chargeable under Chapter 3 of that Part if the company were UK resident.