231 Tax credits for certain recipients of qualifying distributions.U.K.
M1(1)Subject to sections [F1231AA, ][F2231AB,] 95(1)(b) [F3F4. . . and [F5469(2A)]], [F6section 171(2B) of the Finance Act 1993 and section 219(4B) of the Finance Act 1994,] where [F7, in any year of assessment for which income tax is charged,] a company resident in the United Kingdom makes a qualifying distribution and the person receiving the distribution is another such company or a person resident in the United Kingdom, not being a company, the recipient of the distribution shall be entitled to a tax credit equal to such proportion of the amount or value of the distribution as corresponds to [F8the tax credit fraction in force when] the distribution is made.
[F9(1A)The tax credit fraction is one-ninth.]
(2)F10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3)[F11Subject to subsection (3AA) below,] a person, not being a company resident in the United Kingdom, who is entitled to a tax credit in respect of a distribution may claim to have the credit set against the income tax chargeable on his income under section 3 or on his total income for the year of assessment in which the distribution is made F12. . . .
[F13(3AA)For any year of assessment, the aggregate amount of the tax credits in respect of which claims are made under subsection (3) above by any person must not exceed the aggregate amount of the tax credits in respect of such qualifying distributions (if any) as are brought into charge to tax in the case of that person.]
(3A)F14. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3B)F14. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3C)F14. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3D)F14. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4)Where a distribution mentioned in subsection (1) above is, or falls to be treated as, or under any provision of the Tax Acts is deemed to be, the income of a person other than the recipient, that person shall be treated for the purposes of this section as receiving the distribution (and accordingly the question whether he is entitled to a tax credit in respect of it shall be determined by reference to where he, and not the actual recipient, is resident);and where any such distribution is income of a United Kingdom trust the trustees shall be entitled to a tax credit in respect of it if no other person falls to be treated for the purposes of this section as receiving the distributionF15.
(5)In subsection (4)above “United Kingdom trust” means a trust administered under the law of any part of the United Kingdom, not being a trust the general administration of which is ordinarily carried on outside the United Kingdom and the trustees, or a majority of the trustees, of which are resident or ordinarily resident outside the United KingdomF15.
Textual Amendments
F1Words in s. 231(1) inserted (with effect in accordance with s. 102(9) of the amending Act) by Finance Act 1998 (c. 36), s. 102(1)
F2Words in s. 231(1) inserted (with effect in accordance with s. 102(10) of the amending Act) by Finance Act 1998 (c. 36), s. 102(2)
F31990 s.42and Sch.7 para.2for accounting periods beginning on or after 1January 1990 (See para.10).
F4Words in s. 231(1) repealed (with effect in accordance with Sch. 33 Pt. 2(10) Note of the repealing Act) by Finance Act 2001 (c. 9), Sch. 33 Pt. 2(10)
F5Words in s. 231(1) substituted (with effect in accordance with Sch. 4 para 4(2) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), Sch. 4 para 4(1)
F6Words in s. 231(1) inserted (with effect in accordance with s. 22(7) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), s. 22(6)
F7Words in s. 231(1) inserted (with effect in accordance with s. 30(11 of the amending Act) by Finance (No. 2) Act 1997 (c. 58), s. 30(2)(a)
F8Words in s. 231(1) substituted (with effect in accordance with s. 30(11) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), s. 30(2)(b)
F9S. 231(1A) inserted (with effect in accordance with s. 30(11) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), s. 30(3)
F10S. 231(2) repealed (with effect in accordance with s. 30(11), Sch. 8 Pt. 2(9) Note 3 of the repealing Act) by Finance (No. 2) Act 1997 (c. 58), s. 30(4), Sch. 8 Pt. 2(9) (with savings in 1998 c. 36, s. 90(1) and S.I. 1998/1871, reg. 4(1))
F11Words in s. 231(3) substituted (with effect in accordance with s. 30(11) of the amending Act) by Finance (No. 2) Act 1997 (c.58), s. 30(5)(a)
F12Words in s. 231(3) repealed (with effect in accordance with s. 30(11), Sch. 8 Pt. 2(9) Note 3 of the repealing Act) by Finance (No. 2) Act 1997 (c. 58), s. 30(5)(b), Sch. 8 Pt. 2(9)
F13S. 231(3AA) inserted (with effect in accordance with s. 30(11) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), s. 30(6)
F14S. 231(3A)-(3D) repealed (with effect in accordance with s. 30(11), Sch. 8 Pt. 2(9) Note 3 of the repealing Act) by Finance (No. 2) Act 1997 (c. 58), s. 30(7), Sch. 8 Pt. 2(9)
F15 Repealed by 1989 s.187and Sch.17 Part IVbut in accordance with 1989 ss.110and 111.
Modifications etc. (not altering text)
C1 See 1989 s.107and Sch.12—close companies.
C2S. 231 excluded (27.7.1999) by Commonwealth Development Corporation Act 1999 (c. 20), Sch. 3 paras. 1, 6(2)(b)
C3 See—s.94—taxation of dealer's receipts on purchase by company of own shares.s.423et seq—close company income.s.448—overseas life assurance companies.
C4S. 231(1) excluded by Finance Act 1993 (c. 34), s. 171(2B) (as inserted (with effect in accordance with s. 22(7) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), s. 22(1))
C5S. 231(1) excluded by Finance Act 1993 (c. 34), s. 171(4B) (as inserted (with effect in accordance with s. 22(7) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), s. 22(4))
C6 See—s.812—certain non resident companies connected with unitary states.s.824—repayment supplement.
C7S. 231(4) applied (31.7.1998) by Finance Act 1998 (c. 36), s. 76(4)
Marginal Citations
M1Source—1972 s.86; 1972 s.110(1)