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Corporation Tax Act 2009

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Chapter 5U.K.Distributions from unauthorised unit trusts

971Overview of ChapterU.K.

(1)This Chapter—

(a)applies the charge to corporation tax on income to amounts which unit holders in unauthorised unit trust schemes are treated in certain circumstances as receiving from the scheme, and

(b)provides for the calculation of the amount treated as received.

(2)The following are also relevant to the tax treatment of such amounts in the hands of the unit holder—

(a)section 848 of ITA 2007 (under which a sum representing income tax treated as deducted under section 941 of that Act (deemed deduction by trustees of income tax from deemed payments to unit holders) is[F1, subject to section 943A of that Act (treatment of cases involving double tax relief),] treated as income tax paid by the unit holder), and

(b)[F2section 967 of CTA 2010] (set off of income tax deducted at source against corporation tax).

Textual Amendments

F1Words in s. 971(2)(a) inserted (with effect in accordance with Sch. 13 para. 3 of the amending Act) by Finance Act 2010 (c. 13), Sch. 13 para. 2(4)

F2Words in s. 971(2)(b) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 663 (with Sch. 2)

972Charge to tax under this ChapterU.K.

(1)The charge to corporation tax on income applies to income treated as received by a unit holder from a unit trust scheme to which this section applies.

(2)For the purposes of this Chapter a unit holder is treated as receiving such income if an amount is shown in the scheme's accounts as income available for payment to unit holders or for investment.

(3)This section applies to a unit trust scheme if—

(a)the scheme is an unauthorised unit trust, and

(b)the trustees of the scheme are UK resident.

(4)Unauthorised unit trust” has the meaning given by section 989 of ITA 2007.

973Amount of income treated as receivedU.K.

(1)The amount of the income which a unit holder is treated as receiving under section 972(2) is its gross amount and is calculated by reference to distribution periods.

(2)To calculate the gross amount of the income treated as received by a unit holder for a distribution period—

Step 1

Calculate the unit holder's share of the unit trust scheme's available income by applying the formula—

where—

SAI is the total amount shown in the scheme's accounts as income available for payment to unit holders or for investment,

R is the unit holder's rights, and

TR is all the unit holders' rights.

Step 2

Gross up the unit holder's share of the scheme's available income by reference to the basic rate for the tax year in which the income from the scheme is treated as received.

(3)The income from a scheme for a distribution period is treated as received on the date or latest date provided by the terms of the scheme for any distribution for the period, unless that date is more than 12 months after it ends.

(4)If—

(a)that date is more than 12 months after the distribution period ends, or

(b)no date is so provided,

the income for the period is treated as received on the last day of the period.

(5)In this section “distribution period” means a period over which income from the investments subject to the trusts is aggregated to ascertain the amount available for distribution to unit holders.

This is subject to subsections (6) and (7).

(6)If the scheme does not provide for distribution periods, its distribution periods are taken to be successive periods of 12 months, the first of which began with the day on which the scheme took effect.

(7)If the scheme provides for a distribution period of more than 12 months, each successive period of 12 months within that period and any remaining period of less than 12 months are taken to be distribution periods.

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