Income and Corporation Taxes Act 1988

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