Corporation Tax Act 2009 (c. 4)

Part 10 U.K. Miscellaneous income

Chapter 3 U.K. Beneficiaries' income from estates in administration

General U.K.

962 Income from which basic amounts are treated as paid U.K.

(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 just and reasonable for their different interests.

(3) Assumption B is that payments are made from those parts [F1 in descending order, starting with the income bearing income tax at the highest rate and ending with the income bearing income tax at the lowest rate].

(4) If some, but not all, of the aggregate income of the estate is income [F2 within section 963], 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 section 963 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 the basic amount is paid.

Textual Amendments

F1 Words in s. 962(3) substituted (with effect in relation to accounting periods beginning on or after 1.4.2023) by Finance (No. 2) Act 2023 (c. 30), Sch. 2 paras. 9(a), 14(2)(b)

F2 Words in s. 962(4) substituted (with effect in relation to accounting periods beginning on or after 1.4.2023) by Finance (No. 2) Act 2023 (c. 30), Sch. 2 paras. 9(b), 14(2)(b)

[F3 962A Income from which sums within section 951(1)(b) are treated as paid U.K.

(1) The part of the aggregate income of the estate from which a sum within section 951(1)(b) 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 an absolute interest in the residue of the estate, such apportionments of the aggregate income of the estate in respect of those interests are to be made as are just and reasonable for the different interests.

(3) Assumption B is that sums are paid from the income to which a person’s share of the residuary estate relates in descending order, starting with the income bearing income tax at the highest rate and ending with the income bearing income tax at the lowest rate.

(4) If some, but not all, of the aggregate income of the estate is income within section 963, 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 section 963 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 the basic amount is paid.]

Textual Amendments

F3 S. 962A inserted (with effect in relation to accounting periods beginning on or after 1.4.2023) by Finance (No. 2) Act 2023 (c. 30), Sch. 2 paras. 7(3), 14(2)(b)

963 Income treated as bearing income tax U.K.

(1) This section has effect for the purposes of—

• section 946 (the applicable rate for grossing up basic amounts of estate income),

• section 952 (applicable rate for determining assumed income entitlement (UK estates)), F4 ...

• section 962 (income from which basic amounts are treated as paid) [F5 , and

• section 962A (income from which sums within section 951(1)(b) are treated as paid).]

(2) If the aggregate income of the estate includes a sum within subsection (3) [F6 , (3A)] 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—

(a) a sum charged under Chapter 3 of Part 4 of ITTOIA 2005 (dividends etc. from UK resident companies etc.), F7 ...

F7 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F8 (3A) A sum that is part of the aggregate income of the estate because of falling within section 947(2)(c) (stock dividends) or (d) (release of loans to participator in close company: loans and advances to persons who die) is treated as bearing income tax at 0%.]

(4) A sum that is part of the aggregate income of the estate because of falling within section 947(2)(e) (gains from life insurance contracts etc.) is treated as bearing income tax at the basic rate.

(5) Income tax treated as borne under section 941(3) or 942(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.

Textual Amendments

F4 Word in s. 963(1) omitted (with effect in relation to accounting periods beginning on or after 1.4.2023) by Finance (No. 2) Act 2023 (c. 30), Sch. 2 paras. 8(3)(a), 14(2)(b)

F5 Words in s. 963(1) inserted (with effect in relation to accounting periods beginning on or after 1.4.2023) by Finance (No. 2) Act 2023 (c. 30), Sch. 2 paras. 7(4)(a), 14(2)(b)

F6 Word in s. 963(2) inserted (with effect in relation to accounting periods beginning on or after 1.4.2023) by Finance (No. 2) Act 2023 (c. 30), Sch. 2 paras. 8(4)(a), 14(2)(b)

F7 S. 963(3)(b) and word omitted (with effect in relation to accounting periods beginning on or after 1.4.2023) by Finance (No. 2) Act 2023 (c. 30), Sch. 2 paras. 8(4)(b), 14(2)(b)

F8 S. 963(3A) inserted (with effect in relation to accounting periods beginning on or after 1.4.2023) by Finance (No. 2) Act 2023 (c. 30), Sch. 2 paras. 8(4)(c), 14(2)(b)

964 Transfers of assets etc treated as payments U.K.

(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.

(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 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

(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.

965 Assessments, adjustments and claims after the administration period U.K.

(1) This subsection applies if after the administration period ends it is apparent that a company is liable for corporation tax on estate income for any accounting period for which it previously appeared not to be so liable or to be liable for tax on a lesser amount.

(2) If subsection (1) applies—

(a) the company may be assessed and taxed for the accounting period, and

(b) any relief or additional relief to which the company may be entitled for the accounting period is to be allowed if a claim is made.

(3) This subsection applies if after the administration period ends it is apparent that a company which previously appeared to be liable for corporation tax on estate income for any accounting period 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 corporation tax for the accounting period are to be made, and

(b) if the company has been allowed relief which exceeds the relief that could have been given by reference to the amount actually charged for the accounting period, the excess is to be treated as chargeable for that accounting period under the charge to corporation tax on income.

(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 otherwise allowed if it is made on or before the third anniversary of the 31 January following the accounting period in which the administration period ends.

F9 966 Power to obtain information from personal representatives and beneficiaries U.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F9 S. 966 omitted (13.8.2009) by virtue of Finance Act 2009, Schedule 47 (Consequential Amendments) Order 2009 (S.I. 2009/2035), art. 1, Sch. para. 58

967 Statements relating to estate income U.K.

(1) If a company within subsection (2) requests it in writing, a personal representative of a deceased person must provide the company with a statement showing—

(a) the amount treated as estate income arising from the company's interest in the whole or part of the deceased person's estate for which the company is liable to corporation tax for an accounting period, and

(b) the amount of any tax at the applicable rate which any such amount is treated as having borne.

(2) A company is within this subsection if—

(a) it has or has had an absolute or limited interest in the whole or part of the residue of the estate, or

(b) estate income has arisen to it from a discretionary interest it has or has had in the whole or part of the residue of the estate.

(3) A statement under subsection (1) must be in writing.

(4) The duty to comply with a request under this section is enforceable by the company which made it.