Part 5Miscellaneous income
Chapter 5Settlements: amounts treated as income of settlor F8or family
Capital sums treated as income of settlor: trustees' payments
636Calculation of undistributed income
1
For the purposes of section 635, F6unprotected income arising under a settlement in any tax year is treated as F6unprotected income which has not been distributed so far as it exceeds the total amount of—
a
the sums to which subsection (2) applies,
b
the expenses to which subsection (4) applies, and
c
if the trustees of the settlement are trustees for charitable purposes, the amount to which subsection (6) applies.
2
This subsection applies to F5... sums paid in the tax year to any persons by the trustees of the settlement F7that are payments of unprotected income, or sums treated as representing unprotected income, and that—
a
are treated in that year (otherwise than under section 633) as the income of those persons for income tax purposes, or
3
Subsection (2) is subject to section 637(1).
4
This subsection applies to any expenses of the trustees of the settlement paid in the tax year which, in the absence of any express provision of the settlement, would be properly chargeable to F3unprotected income.
5
Subsection (4)—
a
does not apply to expenses so far as they are included in the sums mentioned in subsection (2), and
b
is subject to section 637(2) to (7).
6
This subsection applies to the amount by which—
where—
A is any F9unprotected income arising under the settlement in the tax year in respect of which exemption from tax may be granted under F1any provision to which subsection (7) applies, and
B is the total amount of any such sums or expenses as are mentioned in subsections (2) and (4) paid in that year which are properly chargeable to the income.
F27
This subsection applies to the following provisions of ITA 2007—
section 521(4) (gifts entitling donor to gift-aid relief),
section 522(5) (gifts of money from companies),
section 523(5) (payments from other charities),
section 524 (profits etc of charitable trades),
section 529 (profits from fund-raising events),
section 530 (profits from lotteries),
section 531 (property income etc),
section 532 (savings and investment income),
section 533 (public revenue dividends),
section 536 (miscellaneous income), and
section 537 (income from estates in administration).
Words in Pt. 5 Ch. 5 heading inserted (with effect in accordance with Sch. 10 para. 21 of the amending Act) by Finance Act 2018 (c. 3), Sch. 10 para. 3(2)