Income and Corporation Taxes Act 1988 (c. 1)

PART XII U.K. SPECIAL CLASSES OF COMPANIES AND BUSINESSES

CHAPTER III U.K. UNIT TRUST SCHEMES, DEALERS IN SECURITIES ETC.

Unit trust schemes U.K.

468F F1 Authorised unit trusts: distributions. U.K.

(1) Subsection (2) below applies where—

(a) as regards a distribution period ending after 31st December 1990 a dividend is treated by virtue of section 468(2) as paid to a unit holder (whether or not income is in fact paid to the unit holder),

(b) the dividend is treated as paid by the trustees of a unit trust scheme which is an authorised unit trust as respects the accounting period in which the distribution period falls, and

(c) on the date of payment the unit holder is within the charge to corporation tax F2 . . . .

(2) For the purpose of computing corporation tax chargeable in the case of the unit holder [F3 the unfranked portion of the payment] shall be deemed—

(a) to be an annual payment, and not a dividend or other distribution, and

(b) to have been received by the unit holder after deduction of income tax at the [F4 lower rate], for the year of assessment in which the date of payment falls, from a corresponding gross amount.

[F5 (2A) For the purposes of subsection (2) above the unfranked portion of the payment shall be calculated according to the following formula—

(2B) For the purposes of the formula in subsection (2A) above—

• U is the unfranked portion of the payment;

• P is the payment;

• I is the gross amount of the income arising to the trustees in respect of the distribution period in question which has been brought into account in ascertaining the amount of income available for distribution to unit holders in respect of that period; and

• D is so much of I as represents franked investment income from the investments subject to the trusts.]

(3) Subsection (2) above shall have effect subject to the following provisions of this section and to section 468G.

(4) Subsection (2) above shall not apply where the rights in respect of which the dividend is treated as paid are held by the trustees of a unit trust scheme which is an authorised unit trust as respects the accounting period (of that scheme) in which the date of payment falls.

(5) Where the unit holder is on the date of payment the manager of the scheme, subsection (2) above shall not apply in so far as the rights in respect of which the dividend is treated as paid are rights held by him in the ordinary course of his business as manager of the scheme.

(6) Subsection (2) above shall not apply to so much of the payment as is attributable to income of the trustees arising before 1st January 1991.

(7) Subsection (6) above shall not apply where—

(a) the payment is treated as made as regards a distribution period falling in an accounting period as respects which the authorised unit trust is a certified unit trust, or

(b) the authorised unit trust is on the date of payment a fund of funds.

(8) In this section—

• “authorised unit trust” has the same meaning as in section 468,

• “certified unit trust” has the same meaning as in section 468E,

• “distribution period” has the same meaning as in section 468,

• . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• F6 “fund of funds” means a unit trust scheme the sole object of which is to enable the unit holders to participate in or receive profits or income arising from the acquisition, holding, management or disposal of units in unit trust schemes, and

• “unit trust scheme” has the same meaning as in section 469. ]

Textual Amendments

F1 Ss. 468E-468G inserted by Finance Act 1990 (c. 29), s. 51

F2 Words in s. 468F(1)(c) repealed (with effect in accordance with s. 251(1)(2) of the repealing Act) by Finance Act 1994 (c. 9), s. 251(2)(a), Sch. 26 Pt 8(1), Note

F3 Words in s. 468F(2) substituted (27.7.1993 with effect where the date of payment is on or after 1st April 1993) by 1993 c. 34, s. 79, 79, Sch. 6 paras. 5(1)(a), 25(3)

F4 Words in s. 468F(2)(b) substituted (27.7.1993 with effect for the year 1993-94 and subsequent years of assessment) by 1993 c. 34, s. 79, Sch. 6 paras. 5(1)(b), 25(3)

F5 S. 468F(2A)(2B) inserted (27.7.1993 with effect where the date of payment is on or after 1st April 1993) by 1993 c. 34, s. 79, Sch. 6 paras. 5(2), 25(3)

F6 S. 468F(8): definition of "dual resident" repealed (with effect in accordance with s. 251(1)(2) of the repealing Act) by Finance Act 1994 (c. 9), s. 251(2)(b), Sch. 26 Pt 8(1), Note