Schedules
Schedule 2Estates in administration and trusts
Part 1Estates in administration
Chapter 2Corporation tax
7The applicable rate for grossing up for determining shares in an estate in the final tax year
1
Chapter 3 of Part 10 of CTA 2009 (beneficiaries’ income from estates in administration) is amended as follows.
2
In section 951 (reduction in share of residuary income of estate)—
a
b
for subsection (5) substitute—
5A
The applicable rate by reference to which a sum within subsection (1)(b) is grossed up depends on the rate at which income tax was borne by the parts of the aggregate income of the estate from which section 962A treats the sum as having been paid.
5B
If the same rate was borne by all the income from which section 962A treats the sum as having been paid, the applicable rate is that rate.
5C
If different rates were borne by different parts of the income from which section 962A treats the sum as having been paid, each of those rates is the applicable rate by reference to which the corresponding part of the sum is grossed up.
3
After section 962 insert—
962AIncome from which sums within section 951(1)(b) are treated as paid
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.
4
In section 963 (income treated as bearing income tax)—
a
omit the “and” at the end of the entry for section 952;
b
at the end insert
, and
section 962A (income from which sums within section 951(1)(b) are treated as paid).