PART XII SPECIAL CLASSES OF COMPANIES AND BUSINESSES

CHAPTER III UNIT TRUST SCHEMES, DEALERS IN SECURITIES ETC.

Distributions to corporate unit holder

468Q Dividend distribution to corporate unit holder.
(1) Subsection (2) below applies where—
(a) a dividend distribution for a distribution period is made to a unit holder by the trustees of an authorised unit trust; and
(b) on the distribution date for that distribution period the unit holder is within the charge to corporation tax.
(2) For the purpose of computing corporation tax chargeable in the case of the unit holder the unfranked part of the dividend distribution shall be deemed—
(a) to be an annual payment and not a dividend distribution, a foreign income distribution or an interest distribution; and
(b) to have been received by the unit holder after deduction of income tax at the lower rate for the year of assessment in which the distribution date falls, from a corresponding gross amount.
(3) This is how to calculate the unfranked part of the dividend distribution—
U=((A+B)xCD)-B
Where—
U = the unfranked part of the dividend distribution to the unit holder;
A = the amount of the dividend distribution;
B = the amount of any foreign income distribution for the distribution period for which that dividend distribution is made to the unit holder;
C = such amount of the gross income as does not derive from franked investment income;
D = the amount of the gross income.
(4) If the calculation in accordance with subsection (3) above produces a value of U that is less than O, it shall be assumed for the purposes of this section that no part of the dividend distribution is unfranked.
(5) Where the unit holder is on the distribution date the manager of the scheme, subsection (2) above shall not apply in so far as the rights in respect of which the dividend distribution is made are held by him in the ordinary course of his business as manager of the scheme.
(6) For the purposes of this section the references to the gross income are references to the gross income entered in the distribution accounts for the purpose of computing the total amount available for distribution to unit holders for the distribution period in question.