Income and Corporation Taxes Act 1988

696 Absolute 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 administration period or during a part of that period, has an absolute interest in the residue of the estate of a deceased person or in a part thereof.

(2) There shall be ascertained in accordance with section 697 the amount of the residuary income of the estate for each whole year of assessment, and for each broken part of a year of assessment, during which—

(a) the administration period was current, and

(b) that [F2 company] had that interest;

and the amount so ascertained in respect of any year or part of a year or, in the case of a [F2 company] having an absolute interest in a part of a residue, a proportionate part of that amount, is in this Part referred to as the “residuary income” of that [F2 company] for that year of assessment [F3 ; and references to the residuary income of a company for an accounting period are to be construed in accordance with subsection (8)].

[F4 (3) When any sum has been paid during the administration period in respect of that absolute interest, that sum, except so far as it is excluded from the operation of this subsection, shall be deemed for [F5 corporation tax] purposes to have been paid to that [F6 company] as income for the [F7 accounting period] in which it was actually paid.

(3A) A payment shall be excluded from the operation of subsection (3) above to the extent (if any) that the aggregate of that sum and all the sums which—

(a) have been paid previously during the administration period in respect of that absolute interest, and

(b) fall under this section to be treated as paid to that [F8 company] as income [F9 (whether or not the company was a company liable to corporation tax at the time of payment)],

exceeds the aggregated income entitlement of that [F8 company] for the [F10 accounting period] in which the sum is paid.

(3B) For the purposes of this section the aggregated income entitlement of that [F11 company] for any [F12 accounting period] is the amount which would be the aggregate of the amounts received for that [F12 accounting period] and all previous [F13 accounting periods] in respect of the interest if that [F11 company] had a right in [F14 each accounting period] to receive, and had received—

(a) in the case of a United Kingdom estate, [F15 its] residuary income for [F16 that accounting period] less income tax at the applicable rate for [F16 that accounting period]; and

(b) in the case of a foreign estate, [F15 its] residuary income for [F16 that accounting period].]

(4) In the case of a United Kingdom estate, any amount which is deemed to have been paid to that [F17 company] as income for [F17 any accounting period] by virtue of subsection (3) above shall be deemed to be income of such an amount as would, after deduction of income tax for [F17 that accounting period], be equal to the amount deemed to have been so paid, and to be income that has borne income tax at the [F18 applicable rate].

[F19 (5) Where, on the completion of the administration of the estate, the aggregate of all the sums which, apart from this subsection—

(a) have been paid during the administration period in respect of that absolute interest, and

(b) fall under this section to be treated as paid to that [F20 company] as income,

is exceeded by the aggregated income entitlement of that [F20 company] for the [F21 accounting period] in which the administration of the estate is completed, then an amount equal to the amount of the excess shall be treated for the purposes of subsections (3) to (4) above as having been actually paid, immediately before the end of the administration period, in respect of that interest.]

(6) In the case of a foreign estate, any amount which is deemed to have been paid to that [F22 company] as income for any [F23 accounting period] by virtue of this section shall be deemed to be income of that amount F24 . . . .

(7) Where—

(a) a [F25 company] has been charged to [F26 corporation tax for any accounting period] by virtue of this section in respect of an amount deemed to have been paid to [F27 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 [F28 the relevant year of assessment] has borne United Kingdom income tax by deduction or otherwise (“the aggregate income”),

the tax so charged on [F27 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 bears to the amount of the aggregate income.

(8) F29 . . . The residuary income of a company shall be computed in the first instance by reference to years of assessment, and the residuary income for any such year shall be apportioned between the accounting periods (if more than one) comprising that year.

[F30 (9) In subsection (7) “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 in subsections (3) to (6) to accounting periods were references to years of assessment.]

Textual Amendments

F1 Words in s. 696(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. 285(2) (with Sch. 2)

F2 Words in s. 696(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. 285(3)(a) (with Sch. 2)

F3 Words in s. 696(2) added (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. 285(3)(b) (with Sch. 2)

F4 S. 696(3)-(3B) substituted for s. 696(3) (with effect in accordance with Sch. 18 para. 3(3)(4) of the amending Act) by Finance Act 1995 (c. 4), Sch. 18 para. 3(1)

F5 Words in s. 696(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. 285(4)(a) (with Sch. 2)

F6 Word in s. 696(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. 285(4)(b) (with Sch. 2)

F7 Words in s. 696(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. 285(4)(c) (with Sch. 2)

F8 Words in s. 696(3A) 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. 285(5)(a) (with Sch. 2)

F9 Words in s. 696(3A)(b) 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. 285(5)(b) (with Sch. 2)

F10 Words in s. 696(3A) 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. 285(5)(c) (with Sch. 2)

F11 Words in s. 696(3B) 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. 285(6)(a) (with Sch. 2)

F12 Words in s. 696(3B) 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. 285(6)(b) (with Sch. 2)

F13 Words in s. 696(3B) 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. 285(6)(c) (with Sch. 2)

F14 Words in s. 696(3B) 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. 285(6)(d) (with Sch. 2)

F15 Words in s. 696(3B)(a)(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. 285(6)(e) (with Sch. 2)

F16 Words in s. 696(3B)(a)(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. 285(6)(f) (with Sch. 2)

F17 Words in s. 696(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. 285(7) (with Sch. 2)

F18 Words in s. 696(3)-(5) 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)

F19 S. 695(5) substituted (with effect in accordance with Sch. 18 para. 3(3)(4) of the amending Act) by Finance Act 1995 (c. 4), Sch. 18 para. 3(2)

F20 Words in s. 696(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. 285(8)(a) (with Sch. 2)

F21 Words in s. 696(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. 285(8)(b) (with Sch. 2)

F22 Word in s. 696(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. 285(9)(a) (with Sch. 2)

F23 Words in s. 696(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. 285(9)(b) (with Sch. 2)

F24 Words in s. 696(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. 285(9)(c), Sch. 3 (with Sch. 2)

F25 Word in s. 696(7)(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. 285(10)(a) (with Sch. 2)

F26 Words in s. 696(7)(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. 285(10)(b) (with Sch. 2)

F27 Words in s. 696(7) 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. 285(10)(d) (with Sch. 2)

F28 Words in s. 696(7)(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. 285(10)(c) (with Sch. 2)

F29 Words in s. 696(8) 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. 285(11), Sch. 3 (with Sch. 2)

F30 S. 696(9) 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. 285(12) (with Sch. 2)

Marginal Citations

M1 Source-1970 s.427; 1971 Sch.6 53