Income and Corporation Taxes Act 1988

PART XVI U.K. ESTATES OF DECEASED PERSONS IN COURSE OF ADMINISTRATION

695 Limited interests in residue. U.K.

M1 (1) The following provisions of this section shall have effect in relation to a [F1 company which], during the period commencing on the death of a deceased person and ending on the completion of the administration of his estate (“the administration period”) or during a part of that period, has a limited interest in the residue of the estate or in a part thereof.

(2) When any sum has been paid during the administration period in respect of that limited interest, the amount of that sum shall F2 . . . be deemed for [F3 corporation tax] purposes to have been paid to that [F4 company] as income for the [F5 accounting period] in which that sum was paid or, in the case of a sum paid in respect of an interest that has ceased, for the last [F5 accounting period] in which it was subsisting.

[F6 (3) Where, on the completion of the administration of the estate, there is an amount which remains payable in respect of that limited interest, that amount shall be deemed for [F7 corporation tax] purposes to have been paid to that [F8 company] as income for the [F9 accounting period] in which the administration period ends or, in the case of a sum which is deemed to be paid in respect of an interest that ceased before the end of [F10 the administration period], for the last [F9 accounting period] in which that interest was subsisting.]

(4) Any amount which is deemed to have been paid to that [F11 company] as income [F12 for any accounting period] by virtue of this section shall—

(a) in the case of a United Kingdom estate, be deemed to be income of such an amount as would after deduction of income tax for [F13 the relevant year of assessment] be equal to the amount deemed to have been so paid, and to be income which has borne income tax at the [F14 applicable rate]; and

(b) in the case of a foreign estate, be deemed to be income of the amount deemed to have been so paid F15 . . . .

(5) Where—

(a) a [F16 company] has been charged to [F17 corporation tax for any accounting period] by virtue of this section in respect of an amount deemed to have been paid to [F18 it] as income in respect of an interest in a foreign estate (“the deemed income”), and

(b) any part of the aggregate income of that estate for [F19 the relevant year of assessment] has borne United Kingdom income tax by deduction or otherwise (“the aggregate income”),

the tax so charged on [F18 it] shall, on proof of the facts on a claim, be reduced by an amount bearing the same proportion thereto as the amount of the deemed income which has borne United Kingdom income tax, less the tax so borne, bears to the amount of the aggregate income, less the tax so borne.

(6) Where relief has been given under subsection (5) above, such part of the amount in respect of which [F20 the company] has been charged [F21 to corporation tax] as corresponds to the proportion mentioned in that subsection shall F22 . . . be deemed to represent income of such an amount as would after deduction of income tax be equal to that part of the amount charged.

[F23 (7) In this section “the relevant year of assessment”, in relation to an amount deemed to have been paid to a company as income for an accounting period by virtue of this section, means the year of assessment for which the amount would have been deemed to have been paid as income if references to accounting periods in subsections (2) and (3) were references to years of assessment.]

Textual Amendments

F1 Words in s. 695(1) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 284(2) (with Sch. 2)

F2 Words in s. 695(2) repealed (with effect in accordance with Sch. 18 para. 2(2) of the amending Act) by Finance Act 1995 (c. 4), Sch. 18 para. 2(1), Sch. 29 Pt. 8(10)

F3 Words in s. 695(2) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 284(3)(a) (with Sch. 2)

F4 Word in s. 695(2) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 284(3)(b) (with Sch. 2)

F5 Words in s. 695(2) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 284(3)(c) (with Sch. 2)

F6 S. 695(3) substituted (with effect in accordance with Sch. 18 para. 2(2) of the amending Act) by Finance Act 1995 (c. 4), Sch. 18 para. 2(1)

F7 Words in s. 695(3) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 284(4)(a) (with Sch. 2)

F8 Word in s. 695(3) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 284(4)(b) (with Sch. 2)

F9 Words in s. 695(3) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 284(4)(c) (with Sch. 2)

F10 Words in s. 695(3) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 284(4)(d) (with Sch. 2)

F11 Word in s. 695(4) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 284(5)(a) (with Sch. 2)

F12 Words in s. 695(4) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 284(5)(b) (with Sch. 2)

F13 Words in s. 695(4)(a) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 284(5)(c) (with Sch. 2)

F14 Words in s. 695(4)(a) substituted (27.7.1993 with effect for the year 1993-1994 and subsequent years of assessment) by 1993 c. 34, s. 79, Sch. 6 paras. 11(1), 25(1)

F15 Words in s. 695(4)(b) repealed (6.4.2005 with effect in accordance with s. 883(1) of the repealing Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 284(5)(d), Sch. 3 (with Sch. 2)

F16 Word in s. 695(5)(a) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 284(6)(a) (with Sch. 2)

F17 Words in s. 695(5)(a) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 284(6)(b) (with Sch. 2)

F18 Words in s. 695(5) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 284(6)(c) (with Sch. 2)

F19 Words in s. 695(5)(b) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 284(6)(d) (with Sch. 2)

F20 Words in s. 695(6) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 284(7)(a) (with Sch. 2)

F21 Words in s. 695(6) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 284(7)(b) (with Sch. 2)

F22 Words in s. 695(6) repealed (6.4.2005 with effect in accordance with s. 883(1) of the repealing Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 284(7)(c), Sch. 3 (with Sch. 2)

F23 S. 695(7) inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 284(8) (with Sch. 2)

Modifications etc. (not altering text)

C1 See 1974 s.44(4) and Sch.7 para.9(1)(2)—development gains to be excluded from aggregate income and United Kingdom tax thereon to be left out of account.

Marginal Citations

M1 Source-1970 s.426; 1971 Sch.6 52

696 Absolute interests in residue. U.K.

M2 (1) The following provisions of this section shall have effect in relation to a [F24 company which], during the administration period or during a part of that period, has an absolute interest in the residue of the estate of a deceased person or in a part thereof.

(2) There shall be ascertained in accordance with section 697 the amount of the residuary income of the estate for each whole year of assessment, and for each broken part of a year of assessment, during which—

(a) the administration period was current, and

(b) that [F25 company] had that interest;

and the amount so ascertained in respect of any year or part of a year or, in the case of a [F25 company] having an absolute interest in a part of a residue, a proportionate part of that amount, is in this Part referred to as the “residuary income” of that [F25 company] for that year of assessment [F26 ; and references to the residuary income of a company for an accounting period are to be construed in accordance with subsection (8)].

[F27 (3) When any sum has been paid during the administration period in respect of that absolute interest, that sum, except so far as it is excluded from the operation of this subsection, shall be deemed for [F28 corporation tax] purposes to have been paid to that [F29 company] as income for the [F30 accounting period] in which it was actually paid.

(3A) A payment shall be excluded from the operation of subsection (3) above to the extent (if any) that the aggregate of that sum and all the sums which—

(a) have been paid previously during the administration period in respect of that absolute interest, and

(b) fall under this section to be treated as paid to that [F31 company] as income [F32 (whether or not the company was a company liable to corporation tax at the time of payment)],

exceeds the aggregated income entitlement of that [F31 company] for the [F33 accounting period] in which the sum is paid.

(3B) For the purposes of this section the aggregated income entitlement of that [F34 company] for any [F35 accounting period] is the amount which would be the aggregate of the amounts received for that [F35 accounting period] and all previous [F36 accounting periods] in respect of the interest if that [F34 company] had a right in [F37 each accounting period] to receive, and had received—

(a) in the case of a United Kingdom estate, [F38 its] residuary income for [F39 that accounting period] less income tax at the applicable rate for [F39 that accounting period]; and

(b) in the case of a foreign estate, [F38 its] residuary income for [F39 that accounting period].]

(4) In the case of a United Kingdom estate, any amount which is deemed to have been paid to that [F40 company] as income for [F40 any accounting period] by virtue of subsection (3) above shall be deemed to be income of such an amount as would, after deduction of income tax for [F40 that accounting period], be equal to the amount deemed to have been so paid, and to be income that has borne income tax at the [F41 applicable rate].

[F42 (5) Where, on the completion of the administration of the estate, the aggregate of all the sums which, apart from this subsection—

(a) have been paid during the administration period in respect of that absolute interest, and

(b) fall under this section to be treated as paid to that [F43 company] as income,

is exceeded by the aggregated income entitlement of that [F43 company] for the [F44 accounting period] in which the administration of the estate is completed, then an amount equal to the amount of the excess shall be treated for the purposes of subsections (3) to (4) above as having been actually paid, immediately before the end of the administration period, in respect of that interest.]

(6) In the case of a foreign estate, any amount which is deemed to have been paid to that [F45 company] as income for any [F46 accounting period] by virtue of this section shall be deemed to be income of that amount F47 . . . .

(7) Where—

(a) a [F48 company] has been charged to [F49 corporation tax for any accounting period] by virtue of this section in respect of an amount deemed to have been paid to [F50 it] as income in respect of an interest in a foreign estate (“the deemed income”), and

(b) any part of the aggregate income of that estate for [F51 the relevant year of assessment] has borne United Kingdom income tax by deduction or otherwise (“the aggregate income”),

the tax so charged on [F50 it] shall, on proof of the facts on a claim, be reduced by an amount bearing the same proportion thereto as the amount of the deemed income which has borne United Kingdom income tax bears to the amount of the aggregate income.

(8) F52 . . . The residuary income of a company shall be computed in the first instance by reference to years of assessment, and the residuary income for any such year shall be apportioned between the accounting periods (if more than one) comprising that year.

[F53 (9) In subsection (7) “the relevant year of assessment”, in relation to an amount deemed to have been paid to a company as income for an accounting period by virtue of this section, means the year of assessment for which the amount would have been deemed to have been paid as income if references in subsections (3) to (6) to accounting periods were references to years of assessment.]

Textual Amendments

F24 Words in s. 696(1) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 285(2) (with Sch. 2)

F25 Words in s. 696(2) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 285(3)(a) (with Sch. 2)

F26 Words in s. 696(2) added (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 285(3)(b) (with Sch. 2)

F27 S. 696(3)-(3B) substituted for s. 696(3) (with effect in accordance with Sch. 18 para. 3(3)(4) of the amending Act) by Finance Act 1995 (c. 4), Sch. 18 para. 3(1)

F28 Words in s. 696(3) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 285(4)(a) (with Sch. 2)

F29 Word in s. 696(3) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 285(4)(b) (with Sch. 2)

F30 Words in s. 696(3) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 285(4)(c) (with Sch. 2)

F31 Words in s. 696(3A) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 285(5)(a) (with Sch. 2)

F32 Words in s. 696(3A)(b) inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 285(5)(b) (with Sch. 2)

F33 Words in s. 696(3A) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 285(5)(c) (with Sch. 2)

F34 Words in s. 696(3B) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 285(6)(a) (with Sch. 2)

F35 Words in s. 696(3B) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 285(6)(b) (with Sch. 2)

F36 Words in s. 696(3B) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 285(6)(c) (with Sch. 2)

F37 Words in s. 696(3B) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 285(6)(d) (with Sch. 2)

F38 Words in s. 696(3B)(a)(b) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 285(6)(e) (with Sch. 2)

F39 Words in s. 696(3B)(a)(b) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 285(6)(f) (with Sch. 2)

F40 Words in s. 696(4) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 285(7) (with Sch. 2)

F41 Words in s. 696(3)-(5) substituted (27.7.1993 with effect for the year 1993-1994 and subsequent years of assessment) by 1993 c. 34, s. 79, Sch. 6 paras. 11(1), 25(1)

F42 S. 695(5) substituted (with effect in accordance with Sch. 18 para. 3(3)(4) of the amending Act) by Finance Act 1995 (c. 4), Sch. 18 para. 3(2)

F43 Words in s. 696(5) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 285(8)(a) (with Sch. 2)

F44 Words in s. 696(5) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 285(8)(b) (with Sch. 2)

F45 Word in s. 696(6) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 285(9)(a) (with Sch. 2)

F46 Words in s. 696(6) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 285(9)(b) (with Sch. 2)

F47 Words in s. 696(6) repealed (6.4.2005 with effect in accordance with s. 883(1) of the repealing Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 285(9)(c), Sch. 3 (with Sch. 2)

F48 Word in s. 696(7)(a) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 285(10)(a) (with Sch. 2)

F49 Words in s. 696(7)(a) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 285(10)(b) (with Sch. 2)

F50 Words in s. 696(7) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 285(10)(d) (with Sch. 2)

F51 Words in s. 696(7)(b) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 285(10)(c) (with Sch. 2)

F52 Words in s. 696(8) repealed (6.4.2005 with effect in accordance with s. 883(1) of the repealing Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 285(11), Sch. 3 (with Sch. 2)

F53 S. 696(9) inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 285(12) (with Sch. 2)

Marginal Citations

M2 Source-1970 s.427; 1971 Sch.6 53

697 Supplementary provisions as to absolute interests in residue. U.K.

M3 (1) The amount of the residuary income of an estate for any year of assessment shall be ascertained by deducting from the aggregate income of the estate for that year—

(a) the amount of any annual interest, annuity or other annual payment for that year which is a charge on residue and the amount of any payment made in that year in respect of any such expenses incurred by the personal representatives as such in the management of the assets of the estate as, in the absence of any express provision in a will, would be properly chargeable to income, but excluding any such interest, annuity or payment allowed or allowable in computing the aggregate income of the estate; and

(b) the amount of any of the aggregate income of the estate for that year to which a person has on or after assent become entitled by virtue of a specific disposition either for a vested interest during the administration period or for a vested or contingent interest on the completion of the administration.

[F54 (1A) For the purpose of ascertaining under subsection (1) above the residuary income of an estate for any year, where the amount of the deductions falling to be made from the aggregate income of the estate for that year (including any falling to be made by virtue of this subsection) exceeds the amount of that income, the excess shall be carried forward and treated for that purpose as an amount falling to be deducted from the aggregate income of the estate for the following year.]

(2) In the event of its appearing, on the completion of the administration of an estate in the residue of which, or in a part of the residue of which, a [F55 company] had an absolute interest at the completion of the administration, that the aggregate of the benefits received in respect of that interest does not amount to as much as the aggregate for all years of the residuary income of the [F55 company] having that interest, [F56 section 696 shall have effect as if the amount of the deficiency were to be applied in reducing the amount taken to be [F57 its] residuary income for the year in which the administration of the estate is completed and, in so far as the deficiency exceeds that income, in reducing the amount taken to be [F57 its] residuary income for the previous year, and so on.]

(3) In subsection (2) above “benefits received” in respect of an absolute interest means the following amounts in respect of all sums paid before, or payable on, the completion of the administration in respect of that interest, that is to say—

(a) as regards a sum paid before the completion of the administration, in the case of a United Kingdom estate such an amount as would, after deduction of income tax for the year of assessment in which that sum was paid, be equal to that sum, or in the case of a foreign estate the amount of that sum; and

(b) as regards a sum payable on the completion of the administration, in the case of a United Kingdom estate such an amount as would, after deduction of income tax for the year of assessment in which the administration is completed, be equal to that sum, or in the case of a foreign estate the amount of that sum.

(4) In the application of subsection (2) above to a residue or a part of a residue in which a person other than the person having an absolute interest at the completion of the administration had an absolute interest at any time during the administration period, the aggregates mentioned in that subsection shall be computed in relation to those interests taken together F58 . . . .

[F59 (5) If the amount resulting from the computation mentioned in subsection (4) is greater than the total amount of the reduction which can be made under subsection (2), the share of the residuary income of the estate of the last previous holder of the interest for the last year in which that person had that interest is to be reduced, and so on.]

Textual Amendments

F54 S. 697(1A) inserted (with effect in accordance with Sch. 18 para. 4(3) of the amending Act) by Finance Act 1995 (c. 4), Sch. 18 para. 4(1)

F55 Words in s. 697(2) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 286(2)(a) (with Sch. 2)

F56 Words in s. 697(2) substituted (with effect in accordance with Sch. 18 para. 4(3) of the amending Act) by Finance Act 1995 (c. 4), Sch. 18 para. 4(2)

F57 Words in s. 697(2) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 286(2)(b) (with Sch. 2)

F58 Words in s. 697(4) repealed (6.4.2005 with effect in accordance with s. 883(1) of the repealing Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 286(3), Sch. 3 (with Sch. 2)

F59 S. 697(5) inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 286(4) (with Sch. 2)

Marginal Citations

M3 Source-1970 s.428; 1971 Sch.6 54

698 Special provisions as to certain interests in residue. U.K.

M4 (1) Where the personal representatives of a deceased person have as such a right in relation to the estate of another deceased person such that, if that right were vested in them for their own benefit, they would have an absolute or limited interest in the residue of that estate or in a part of that residue, they shall be deemed to have that interest notwithstanding that that right is not vested in them for their own benefit, and any amount deemed to be paid to them as income by virtue of this Part shall be treated as part of the aggregate income of the estate of the person whose personal representatives they are.

[F60 (1A) Subsection (1B) below applies where—

(a) successively during the administration period there are different persons with interests in the residue of the estate of a deceased person or in parts of such a residue;

(b) the later interest or, as the case may be, each of the later interests arises or is created on the cessation otherwise than by death of the interest that precedes it; and

(c) the earlier or, as the case may be, earliest interest is a limited interest.

(1B) Where this subsection applies, this Part shall have effect in relation to any payment made in respect of any of the interests referred to in subsection (1A) above—

(a) as if all those interests were the same interest so that none of them is to be treated as having ceased on being succeeded by any of the others;

(b) as if (subject to paragraph (c) below) the interest which is deemed to exist by virtue of paragraph (a) above (“the deemed single interest”) were an interest of—

(i) except in a case to which sub-paragraph (ii) below applies, the person in respect of whose interest or previous interest the payment is made;

(ii) in a case where the person entitled to receive the payment is any other person who has or has had an interest which is deemed to be comprised in the deemed single interest, that other person;

and

(c) in so far as any of the later interests is an absolute interest as if, for the purposes of section 696(3A) to (5)—

(i) the earlier interest or interests had never existed and the absolute interest had always existed;

(ii) the sums (if any) which were deemed in relation to the earlier interest or interests to have been paid as income for any [F61 accounting period] to any of the persons entitled thereto were sums previously paid during the administration period in respect of the absolute interest; and

(iii) those sums were sums falling to be treated as sums paid as income to the person entitled to the absolute interest.

(2) Where successively during the administration period there are different persons with absolute interests in the residue of the estate of a deceased person or in parts of such a residue, the aggregate payments and aggregated income entitlement referred to in subsections (3A) and (3B) of section 696 shall be computed for the purposes of that section in relation to an absolute interest subsisting at any time (“the subsequent interest”)—

(a) as if the subsequent interest and any previous absolute interest corresponding to the subsequent interest, or relating to any part of the residue to which the subsequent interest relates, were the same interest; and

(b) as if the residuary income for any [F62 accounting period] of the person entitled to the previous interest were residuary income of the person entitled to the subsequent interest and any amount deemed to be paid as income to the person entitled to the previous interest were an amount deemed to have been paid to the person entitled to the subsequent interest.]

(3) Where, upon the exercise of a discretion, any of the income of the residue of the estate of a deceased person for any period (being the administration period or a part of the administration period) would, if the residue had been ascertained at the commencement of that period, be properly payable to any person, or to another in his right, for his benefit, whether directly by the personal representatives or indirectly through a trustee or other person—

(a) the amount of any sum paid pursuant to an exercise of the discretion in favour of that person shall be deemed for [F63 corporation tax] purposes to have been paid to that person as income for the [F64 accounting period] in which it was paid; and

(b) section 695(4) to (6) shall have effect in relation to an amount which is deemed to have been paid as income by virtue of paragraph (a) above.

[F65 (4) Subsection (5) applies in any case where—

(a) successively during the administration period there are different persons with absolute interests in the residue of the estate of a deceased person, or in parts of such a residue, and

(b) some, but not all are companies liable to corporation tax in respect of income within this Part.

(5) References in this section—

(a) to sums deemed to be paid as income for an accounting period to a person who is not such a company,

(b) to the residuary income for any accounting period of such a person, or

(c) to amounts deemed to be paid to such a person as income,

are references to sums that would be so deemed, to the income that would be such residuary income or, as the case may be, to the amounts that would be so deemed if the assumptions in subsection (6) were made.

(6) The assumptions are—

(a) that each of the persons who is not a company liable to corporation tax in respect of income within this Part is such a company, and

(b) that in the case of each person who is not a company, the person's accounting periods correspond with years of assessment.]

Textual Amendments

F60 S. 698(1A)(1B)(2) substituted for s. 698(2) (with effect in accordance with Sch. 18 para. 5(2) of the amending Act) by Finance Act 1995 (c. 4), Sch. 18 para. 5(1)

F61 Words in s. 698(1B)(c)(ii) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 287(2) (with Sch. 2)

F62 Words in s. 698(2)(b) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 287(3) (with Sch. 2)

F63 Words in s. 698(3)(a) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 287(4)(a) (with Sch. 2)

F64 Words in s. 698(3)(a) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 287(4)(b) (with Sch. 2)

F65 S. 698(4)-(6) inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 287(5) (with Sch. 2)

Marginal Citations

M4 Source-1970 s.429; 1971 Sch.6 55

[F67 698A Taxation of income of beneficiaries at lower rate or at rates applicable to [F66 distribution] income. U.K.

F68 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

Textual Amendments

F66 Word in s. 698A sidenote substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 288(5) (with Sch. 2)

F67 S. 698A inserted (27.7.1993 with effect for the year 1993-1994 and subsequent years of assessment) by 1993 c. 34, s. 79, Sch. 6 paras. 11(2), 25(1)

F68 S. 698A repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 150, Sch. 3 Pt. 1 (with Sch. 2)

699 Relief from higher rate tax for inheritance tax on accrued income. U.K.

F69 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F69 S. 699 repealed (6.4.2005 with effect in accordance with s. 883(1) of the repealing Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 289, Sch. 3 (with Sch. 2)

[F70 699A Untaxed sums comprised in the income of the estate. U.K.

(1) In this section “a relevant amount” means so much of any amount which a person is deemed by virtue of this Part to receive or to have a right to receive as is or would be paid out of sums which—

(a) are included in the aggregate income of the estate of the deceased by virtue of any of [F71 paragraphs (c) to (e) of section 701(8) below]; and

(b) are sums in respect of which the personal representatives are not directly assessable to United Kingdom income tax;

[F72 or out of any sums included in the aggregate income of the estate of the deceased which fall within subsection (1A) below.]

[F73 (1A) A sum falls within this subsection if it is a sum in respect of—

[F74 (a) a distribution chargeable under [F75 Chapter 3 of Part 4 of ITTOIA 2005 (dividends etc. from UK resident companies etc.)]; F76 . . .

(b) F76 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

(1B) Any reference in this Part to a sum to which subsection (1)(a) and (b) above applies includes a reference to a sum falling within subsection (1A) above which is included in the aggregate income of the estate of the deceased.]

(2) In determining for the purposes of this Part whether any amount is a relevant amount—

(a) such apportionments of any sums to which subsection (1)(a) and (b) above applies shall be made between different persons with interests in the residue of the estate as are just and reasonable in relation to their different interests; and

(b) subject to paragraph (a) above, the [F77 assumptions] in section 701(3A)(b) shall apply, but (subject to that) it shall be assumed that payments are to be made out of other sums comprised in the aggregate income of the estate before they are made out of any sums to which subsection (1)(a) and (b) above applies.

(3) In the case of a foreign estate, and notwithstanding anything in section 695(4)(b) or 696(6), a relevant amount shall be deemed—

(a) to be income of such amount as would, after deduction of income tax for the year in which it is deemed to be paid, be equal to the relevant amount; and

(b) to be income that has borne tax at the applicable rate.

(4) Sums to which subsection (1)(a) and (b) above applies shall be assumed, for the purpose of determining the applicable rate in relation to any relevant amount, to bear tax—

(a) in the case of sums included by virtue of [F78 section 701(8)(c) or (d), at the dividend][F79 ordinary rate], and

(b) in the case of sums included by virtue of [F80 section 701(8)(e)], at [F81 the [F82 savings rate]][F83 ; and

(c) in the case of sums falling within subsection (1A) above, at the [F79 [F84 dividend] ordinary rate].]

(5) No repayment shall be made of any income tax which by virtue of this Part is treated as having been borne by the income that is represented by a relevant amount.

(6) F85 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

Textual Amendments

F70 S. 699A inserted (with effect in accordance with s. 76(6) of the amending Act) by Finance Act 1995 (c. 4), s. 76(4)

F71 Words in s. 699A(1)(a) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 290(2) (with Sch. 2)

F72 Words in s. 699A(1) inserted (with effect in accordance with s. 21(5) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), s. 21(2)

F73 S. 699A(1A)(1B) inserted (with effect in accordance with s. 21(5) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), s. 21(3)

F74 Words in s. 699A(1A) inserted (with effect in accordance with s. 33(10) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), s. 33(3)

F75 Words in s. 699A(1A)(a) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 290(3)(a) (with Sch. 2)

F76 S. 699A(1A)(b) and preceding word repealed (6.4.2005 with effect in accordance with s. 883(1) of the repealing Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 290(3)(b), Sch. 3 (with Sch. 2)

F77 Word in s. 699A(2)(b) substituted (with effect in accordance with s. 33(11) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), s. 33(4)

F78 Words in s. 699A(4)(a) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 290(4)(a) (with Sch. 2)

F79 Words in s. 699A(4)(a)(c) substituted (with effect in accordance with s. 33(11) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), s. 33(5)

F80 Words in s. 699A(4)(b) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 290(4)(b) (with Sch. 2)

F81 Words in s. 699A(4)(b) substituted (with effect in accordance with s. 173(2) of the amending Act) by Finance Act 2003 (c. 14), Sch. 35 para. 4

F82 Words in s. 699A(4)(b) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 151 (with Sch. 2)

F83 S. 699A(4)(c) and preceding word inserted (with effect in accordance with s. 21(5) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), s. 21(4)

F84 Word in s. 699A(4)(c) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 290(4)(c) (with Sch. 2)

F85 S. 699A(6) repealed (6.4.2005 with effect in accordance with s. 883(1) of the repealing Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 290(5), Sch. 3 (with Sch. 2)

700 Adjustments and information. U.K.

M5 (1) Where on the completion of the administration of an estate any amount is deemed by virtue of this Part to have been paid to any [F86 company] as income for any [F87 accounting period] and—

(a) that amount is greater than the amount that has previously been deemed to have been paid to [F88 it] as income for [F89 that accounting period] by virtue of this Part; or

(b) no amount has previously been so deemed to have been paid to [F88 it] as income for [F89 that accounting period];

an assessment may be made upon [F88 it] for [F89 that accounting period] and [F90 corporation tax] charged accordingly or, on a claim being made for the purpose, any relief or additional relief to which [F91 it] may be entitled shall be allowed accordingly.

(2) Where on the completion of the administration of an estate any amount is deemed by virtue of this Part to have been paid to any [F92 company] as income for any [F93 accounting period], and that amount is less than the amount that has previously been so deemed to have been paid to [F94 it], then—

(a) if an assessment has already been made upon [F94 it] for [F95 that accounting period], such adjustments shall be made in that assessment as may be necessary for the purpose of giving effect to the provisions of this Part which take effect on the completion of the administration, and any [F96 corporation tax] overpaid shall be repaid; and

(b) if—

(i) any relief has been allowed to [F94 it] by reference to the amount which has been previously deemed by virtue of this Part to have been paid to [F94 it] as income for [F95 that accounting period], and

(ii) the amount of that relief exceeds the amount of relief which could have been given by reference to the amount which, on the completion of the administration, is deemed to have been paid to [F94 it] as income for [F95 that accounting period],

the relief so given in excess may, if not otherwise made good, be charged under Case VI of Schedule D and recovered from that [F92 company] accordingly.

(3) Notwithstanding anything in the Tax Acts, the time within which an assessment may be made for the purposes of this Part, or an assessment may be adjusted for those purposes, or a claim for relief may be made by virtue of this Part, shall not expire before the end of the [F97 period of three years beginning with the 31st January next] following the [F98 accounting period] in which the administration of the estate in question was completed.

(4) An inspector may by notice require any person being or having been a personal representative of a deceased person, or having or having had an absolute or limited interest in the residue of the estate of a deceased person or in a part of such residue, to furnish him within such time as he may direct (not being less than 28 days) with such particulars as he thinks necessary for the purposes of this Part [F99 or Chapter 6 of Part 5 of ITTOIA 2005].

[F100 (5) It shall be the duty of a personal representative of a deceased person, if a request to do so is made in writing by a person who has, or has had, an absolute or limited interest in the residue of the estate of the deceased or by a person to whom any of the income of the residue of that estate has been paid in the exercise of any discretion, to furnish the person making the request with a statement in writing setting out—

(a) in respect of every amount which has been, or is treated as having been, actually paid to that person in respect of that interest or in the exercise of that discretion, the amount (if any) deemed under this Part to have been paid to him as income for [F101 an accounting period]; F102 . . .

[F103 (aa) the amount treated as estate income under Chapter 6 of Part 5 of ITTOIA 2005 in respect of that interest or the exercise of that discretion for which he is liable to income tax for a year of assessment, and]

(b) the amount of any tax at the applicable rate which any amount falling within paragraph (a) [F104 or (aa)] above is deemed to have borne;

and, where an amount deemed to have been paid as income to any person for [F105 any accounting period under this Part or treated as estate income under that Chapter] is deemed for any of the purposes of this Part [F106 or that Chapter] to have borne tax on different parts of it at different applicable rates, the matters to be set out in pursuance of [F107 paragraphs (a) to (b)] above shall be set out separately as respects each part of that amount.

(6) The duty imposed by subsection (5) above shall be enforceable at the suit or instance of the person making the request.]

Textual Amendments

F86 Word in s. 700(1) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 291(2)(a) (with Sch. 2)

F87 Words in s. 700(1) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 291(2)(b) (with Sch. 2)

F88 Words in s. 700(1) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 291(2)(c) (with Sch. 2)

F89 Words in s. 700(1) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 291(2)(d) (with Sch. 2)

F90 Words in s. 700(1) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 291(2)(e) (with Sch. 2)

F91 Word in s. 700(1) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 291(2)(f) (with Sch. 2)

F92 Words in s. 700(2) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 291(3)(a) (with Sch. 2)

F93 Words in s. 700(2) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 291(3)(b) (with Sch. 2)

F94 Words in s. 700(2) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 291(3)(c) (with Sch. 2)

F95 Words in s. 700(2) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 291(3)(d) (with Sch. 2)

F96 Words in s. 700(2)(a) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 291(3)(e) (with Sch. 2)

F97 Words in s. 700(3) substituted (with effect in accordance with s. 135(2) of the amending Act) by Finance Act 1996 (c. 8), Sch. 21 para. 20

F98 Words in s. 700(3) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 291(4) (with Sch. 2)

F99 Words in s. 700(4) inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 291(5) (with Sch. 2)

F100 S. 700(5)(6) inserted (1.5.1995) by Finance Act 1995 (c. 4), Sch. 18 para. 6

F101 Words in s. 700(5)(a) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 291(6)(a) (with Sch. 2)

F102 Word at the end of s. 700(5)(a) repealed (6.4.2005 with effect in accordance with s. 883(1) of the repealing Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 291(6)(b), Sch. 3 (with Sch. 2)

F103 S. 700(5)(aa) inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 291(6)(c) (with Sch. 2)

F104 Words in s. 700(5)(b) inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 291(6)(d) (with Sch. 2)

F105 Words in s. 700(5) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 291(6)(e) (with Sch. 2)

F106 Words in s. 700(5) inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 291(6)(f) (with Sch. 2)

F107 Words in s. 700(5) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 291(6)(g) (with Sch. 2)

Marginal Citations

M5 Source-1970 s.431; 1971 Sch.6 57

701 Interpretation. U.K.

(1) M6 The following provisions of this section shall have effect for the purpose of the interpretation of sections 695 to 700.

(2) A person shall be deemed to have an absolute interest in the residue of the estate of a deceased person, or in a part of such residue, if and so long as the capital of the residue or of that part would, if the residue had been ascertained, be properly payable to him, or to another in his right, for his benefit, or is properly so payable, whether directly by the personal representatives or indirectly through a trustee or other person.

(3) A person shall be deemed to have a limited interest in the residue of the estate of a deceased person, or in a part of such residue, during any period, being a period during which he has not an absolute interest in the residue or in that part, where the income of the residue or of that part for that period would, if the residue had been ascertained at the commencement of that period, be properly payable to him, or to another in his right, for his benefit, whether directly by the personal representatives or indirectly through a trustee or other person.

[F108 (3A) “Applicable rate”, in relation to any amount which a person is deemed by virtue of this Part to receive or to have a right to receive, means the basic rate [F109 , the [F110 savings rate] or the [F111 dividend] ordinary rate] according as the income of the residue of the estate out of which that amount is or would be paid bears tax at the basic rate [F109 , the [F110 savings rate] or the [F111 dividend] ordinary rate]; and in determining for the purposes of this Part whether or how much of any payment is or would be deemed to be made out of income that bears tax at one rate rather than another—

(a) such apportionments of the amounts bearing tax at different rates shall be made between different persons with interests in the residue of the estate as are just and reasonable in relation to their different interests; and

(b) subject to paragraph (a) above, it shall be assumed that—

[F112 (i)] payments are to be made out of income bearing tax at the basic rate before they are made out of income bearing tax at the [F110 savings rate][F113 or the [F111 dividend] ordinary rate][F114 ; and

(ii) that payments are to be made out of income bearing tax at the [F110 savings rate] before they are made out of income bearing tax at the [F111 dividend] ordinary rate.]]

(4) “Personal representatives” means, in relation to the estate of a deceased person, his personal representatives as defined in relation to England and Wales by section 55 of the M7 Administration of Estates Act 1925, and persons having in relation to the deceased under the law of another country any functions corresponding to the functions for administration purposes under the law of England and Wales of personal representatives as so defined; and references to “personal representatives as such” shall be construed as references to personal representatives in their capacity as having such functions.

(5) “Specific disposition” means a specific devise or bequest made by a testator, and includes the disposition of personal chattels made by section 46 of the Administration of Estates Act 1925 and any disposition having, whether by virtue of any enactment or otherwise, under the law of another country an effect similar to that of a specific devise or bequest under the law of England and Wales.

Real estate included (either by a specific or general description) in a residuary gift made by the will of a testator shall be deemed to be a part of the residue of his estate and not to be the subject of a specific disposition.

(6) Subject to subsection (7) below, “charges on residue” means, in relation to the estate of a deceased person, the following liabilities, properly payable thereout and interest payable in respect of those liabilities, that is to say—

(a) funeral, testamentary and administration expenses and debts, and

(b) general legacies, demonstrative legacies, annuities and any sum payable out of residue to which a person is entitled under the law of intestacy of any part of the United Kingdom or any other country, and

(c) any other liabilities of his personal representatives as such.

(7) Where, as between persons interested under a specific disposition or in a general or demonstrative legacy or in an annuity and persons interested in the residue of the estate, any such liabilities as are mentioned in subsection (6) above fall exclusively or primarily upon the property that is the subject of the specific disposition or upon the legacy or annuity, only such part (if any) of those liabilities as falls ultimately upon the residue shall be treated as charges on residue.

(8) References to the aggregate income of the estate of a deceased person for any year of assessment shall be construed as references to the aggregate income from all sources for that year of the personal representatives of the deceased as such, treated as consisting of—

(a) any such income which is chargeable to United Kingdom income tax by deduction or otherwise, such income being computed at the amount on which that tax falls to be borne for that year; F115 . . .

(b) any such income which would have been so chargeable if it had arisen in the United Kingdom to a person resident and ordinarily resident there, such income being computed at the full amount thereof actually arising during that year, less such deductions as would have been allowable if it had been charged to United Kingdom income tax;

[F116 (c) any amount of income treated as arising to the personal representatives under section 410(4) of ITTOIA 2005 (stock dividends) that would be charged to income tax under Chapter 5 of Part 4 of that Act if income arising to personal representatives were so charged (see section 413 of that Act);

(d) in a case where section 419(2) of that Act applies (release of loans to participator in close company: debts due from personal representatives), the amount that would be charged to income tax under Chapter 6 of Part 4 apart from that section; and

(e) any amount that would have been treated as income of the personal representatives as such under section 466 of that Act if the condition in section 466(2) had been met (gains from contracts for life insurance);]

but excluding any income from property devolving on the personal representatives otherwise than as assets for payment of the debts of the deceased.

F117

(9) “United Kingdom estate” means, as regards any year of assessment [F118 or accounting period], an estate the income of which comprises only income which either—

(a) has borne United Kingdom income tax by deduction, or

(b) in respect of which the personal representatives are directly assessable to United Kingdom income tax,

not being an estate any part of the income of which is income in respect of which the personal representatives are entitled to claim exemption from United Kingdom income tax by reference to the fact that they are not resident, or not ordinarily resident, in the United Kingdom.

(10) “Foreign estate” means, as regards any year of assessment [F119 or accounting period], an estate which is not a United Kingdom estate.

[F120 (10A) Amounts to which section 699A(1)(a) and (b) applies shall be disregarded in determining whether an estate is a United Kingdom estate or a foreign estate, except that any estate the aggregate income of which comprises only such amounts shall be a United Kingdom estate.]

(11) In a case in which different parts of the estate of a deceased person are the subjects respectively of different residuary dispositions, this Part shall have effect in relation to each of those parts with the substitution—

(a) for references to the estate of references to that part of the estate; and

(b) for references to the personal representatives of the deceased as such of references to his personal representatives in their capacity as having the functions referred to in subsection (4) above in relation to that part of the estate.

(12) In this Part—

(a) references to sums paid include references to assets that are transferred or that are appropriated by a personal representative to himself, and to debts that are set off or released;

(b) references to sums payable include references to assets as to which an obligation to transfer or a right of a personal representative to appropriate to himself is subsisting on the completion of the administration and to debts as to which an obligation to release or set off, or a right of a personal representative so to do in his own favour, is then subsisting; and

(c) references to amount shall be construed, in relation to such assets as are referred to in paragraph (a) or (b) above, as references to their value at the date on which they were transferred or appropriated, or at the completion of the administration, as the case may require, and, in relation to such debts as are so referred to, as references to the amount thereof.

(13) M8 In this Part references to the administration period shall be construed in accordance with section 695(1).

(14) F121 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F108 S. 701(3A) inserted (27.7.1993 with effect for the year 1993-1994 and subsequent years of assessment) by 1993 c. 34, s. 79, Sch. 6 paras. 11(3), 25(1)

F109 Words in s. 701(3A) substituted (with effect in accordance with s. 33(11) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), s. 33(8)

F110 Words in s. 701(3A) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 152 (with Sch. 2)

F111 Words in s. 701(3A) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 292(2) (with Sch. 2)

F112 Words in s. 701(3A)(b) renumbered as s. 701(3A)(b)(i) (with effect in accordance with s. 33(11) of the amending Act) by virtue of Finance (No. 2) Act 1997 (c. 58), s. 33(9)(a)

F113 Words in s. 701(3A)(b)(i) inserted (with effect in accordance with s. 33(11) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), s. 33(9)(b)

F114 S. 701(3A)(b)(ii) added (with effect in accordance with s. 33(11) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), s. 33(9)(c)

F115 Word at the end of s. 701(8)(a) repealed (6.4.2005 with effect in accordance with s. 883(1) of the repealing Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 292(3)(a), Sch. 3 (with Sch. 2)

F116 S. 701(8)(c)-(e) inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 292(3)(b) (with Sch. 2)

F117 Words in s. 701(8) repealed (6.4.2005 with effect in accordance with s. 883(1) of the repealing Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 292(3)(c), Sch. 3 (with Sch. 2)

F118 Words in s. 701(9) inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 292(4) (with Sch. 2)

F119 Words in s. 701(10) inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 292(5) (with Sch. 2)

F120 S. 701(10A) inserted (with effect in accordance with s. 76(6) of the amending Act) by Finance Act 1995 (c. 4), s. 76(5)

F121 S. 701(14) repealed (1.5.1995) by Finance Act 1995 (c. 4), Sch. 18 para. 7, Sch. 29 Pt. 8(10)

Modifications etc. (not altering text)

C2 Definition applied for purposes of 1979(C)—see 1979(C) s.155(1).

Marginal Citations

M6 Source-1970 s.432; 1972 Sch.24 25; 1975 (No.2) s.34(5)

M7 1925 c. 23.

M8 Source-1970 s.426(1)

702 Application to Scotland. U.K.

M9 For the purpose of the application of this Part to Scotland—

(a) any reference to the completion of the administration of an estate shall be construed as a reference to the date at which, after discharge of, or provision for, liabilities falling to be met out of the deceased’s estate (including, without prejudice to the generality of the foregoing, debts, legacies immediately payable, prior rights of surviving spouse [F122 or civil partner] on intestacy and legal rights of surviving spouse [F122 or civil partner] or children), the free balance held in trust for behoof of the residuary legatees has been ascertained;

(b) for paragraph (b) of section 697(1) the following paragraph shall be substituted—

“(b) the amount of any of the aggregate income of the estate for that year to which a person has become entitled by virtue of a specific disposition”;

(c) “real estate” means heritable estate, and

(d) “charge on residue” shall include, in addition to the liabilities specified in section 701(6), any sums required to meet claims in respect of prior rights by surviving spouse [F122 or civil partner] or in respect of legal rights by surviving spouse [F122 or civil partner] or children.

Textual Amendments

F122 Words in s. 702(a)(d) inserted (5.12.2005) by The Tax and Civil Partnership Regulations 2005 (S.I. 2005/3229), regs. 1(1), 96

Marginal Citations

M9 Source-1970 s.433; 1987 Sch.15 2(15)