M1(1)The following provisions of this section shall have effect in relation to a [F1company 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 [F2company] had that interest;
and the amount so ascertained in respect of any year or part of a year or, in the case of a [F2company] 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 [F2company] 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 [F5corporation tax] purposes to have been paid to that [F6company] as income for the [F7accounting 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 [F8company] 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 [F8company] for the [F10accounting period] in which the sum is paid.
(3B)For the purposes of this section the aggregated income entitlement of that [F11company] for any [F12accounting period] is the amount which would be the aggregate of the amounts received for that [F12accounting period] and all previous [F13accounting periods] in respect of the interest if that [F11company] had a right in [F14each accounting period] to receive, and had received—
(a)in the case of a United Kingdom estate, [F15its] residuary income for [F16that accounting period] less income tax at the applicable rate for [F16that accounting period]; and
(b)in the case of a foreign estate, [F15its] residuary income for [F16that accounting period].]
(4)In the case of a United Kingdom estate, any amount which is deemed to have been paid to that [F17company] as income for [F17any 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 [F17that accounting period], be equal to the amount deemed to have been so paid, and to be income that has borne income tax at the [F18applicable 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 [F20company] as income,
is exceeded by the aggregated income entitlement of that [F20company] for the [F21accounting 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 [F22company] as income for any [F23accounting period] by virtue of this section shall be deemed to be income of that amount F24. . . .
(7)Where—
(a)a [F25company] has been charged to [F26corporation tax for any accounting period] by virtue of this section in respect of an amount deemed to have been paid to [F27it] 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 [F28the relevant year of assessment] has borne United Kingdom income tax by deduction or otherwise (“the aggregate income”),
the tax so charged on [F27it] 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
F1Words 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)
F2Words 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)
F3Words 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)
F4S. 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)
F5Words 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)
F6Word 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)
F7Words 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)
F8Words 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)
F9Words 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)
F10Words 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)
F11Words 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)
F12Words 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)
F13Words 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)
F14Words 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)
F15Words 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)
F16Words 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)
F17Words 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)
F18Words 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)
F19S. 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)
F20Words 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)
F21Words 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)
F22Word 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)
F23Words 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)
F24Words 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)
F25Word 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)
F26Words 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)
F27Words 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)
F28Words 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)
F29Words 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)
F30S. 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
M1Source-1970 s.427; 1971 Sch.6 53