Corporation Tax Act 2009 (c. 4)

Part 10 U.K. Miscellaneous income

Chapter 3 U.K. Beneficiaries' income from estates in administration

Introduction U.K.

934 Charge to tax on estate income U.K.

(1) The charge to corporation tax on income applies to estate income.

[F1 (1A) But corporation tax is not charged on estate income so far as that income consists of a basic amount which section 962 treats as having been paid from de minimis aggregate income.

(1B) In subsection (1A), “de minimis aggregate income” means aggregate income of an estate which is treated as bearing income tax at 0% because of section 963(1A).]

(2) In this Chapter—

• “estate” means the estate of a deceased person (whether a UK estate or a foreign estate), and

• “estate income” means the income treated under this Chapter as arising from an absolute, limited or discretionary interest in the whole or part of the residue of an estate.

(3) If different parts of an estate are subject to different residuary dispositions, those parts are treated for the purposes of this Chapter as if they were separate estates.

Textual Amendments

F1 S. 934(1A)(1B) inserted (with effect in relation to accounting periods beginning on or after 1.4.2024) by Finance (No. 2) Act 2023 (c. 30), Sch. 2 paras. 12(2), 14(3)(b)

935 Absolute, limited and discretionary interests U.K.

(1) A person has an absolute interest in the whole or part of the residue of an estate for the purposes of this Chapter if—

(a) the capital of the residue or that part is properly payable to the person, or

(b) it would be so payable if the residue had been ascertained.

(2) A person has a limited interest in the whole or part of the residue of an estate during any period for the purposes of this Chapter if—

(a) the person does not have an absolute interest in it, and

(b) the income from it would be properly payable to the person if the residue had been ascertained at the beginning of that period.

(3) A person has a discretionary interest in the whole or part of the residue of an estate for the purposes of this Chapter if—

(a) a discretion may be exercised in the person's favour, and

(b) on its exercise in the person's favour any of the income of the residue during the whole or part of the administration period (see section 938) would be properly payable to the person if the residue had been ascertained at the beginning of that period.

(4) For the purposes of this section, an amount is only treated as properly payable to a person (“A”) if—

(a) it is properly payable to A, or to another person in A's right, for A's benefit, or

(b) A is a personal representative and subsection (5) applies.

(5) The personal representatives of a deceased person (“B”) are to be treated as having an absolute or limited interest in the whole or part of the residue of the estate of another deceased person (“C”) if—

(a) they have a right in their capacity as B's personal representatives, and

(b) were the right vested in them for their own benefit, they would have that interest in C's estate.

(6) For the purposes of subsection (4), it does not matter whether the amount is payable directly by the personal representatives or through a trustee or other person.

936 Meaning of “UK estate” and “foreign estate” U.K.

(1) In this Chapter—

• “UK estate”, in relation to a tax year, means an estate which meets conditions A and B, or condition C, for that year, and

• “foreign estate”, in relation to a tax year, means an estate which is not a UK estate in relation to that year.

(2) Condition A is that all the income of the estate either—

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

(b) is income in respect of which the personal representatives are directly assessable to United Kingdom income tax for the tax year.

(3) Condition B is that none of the income of the estate is income for which the personal representatives are not liable to United Kingdom income tax for the tax year because they are not UK resident F2 ....

(4) For the purposes of conditions A and B, sums within section 963(3) [F3 , (3A)] or (4) (sums treated as bearing income tax) are ignored.

(5) Condition C is that the aggregate income of the estate for the tax year consists only of sums within section 963(3) [F4 , (3A)] or (4).

Textual Amendments

F2 Words in s. 936(3) omitted (with application in accordance with Sch. 46 para. 139(2) of the amending Act) by virtue of Finance Act 2013 (c. 29), Sch. 46 para. 139(1)

F3 Word in s. 936(4) inserted (with effect in relation to accounting periods beginning on or after 1.4.2023) by Finance (No. 2) Act 2023 (c. 30), Sch. 2 paras. 8(2), 14(2)(b)

F4 Word in s. 936(5) inserted (with effect in relation to accounting periods beginning on or after 1.4.2023) by Finance (No. 2) Act 2023 (c. 30), Sch. 2 paras. 8(2), 14(2)(b)