Part 5 U.K.Miscellaneous income

Chapter 5 U.K.Settlements: amounts treated as income of settlor [F1 or family]

Textual Amendments

F1 Words in Pt. 5 Ch. 5 heading inserted (with effect in accordance with Sch. 10 para. 21 of the amending Act) by Finance Act 2018 (c. 3), Sch. 10 para. 3(2)

Other supplementary provisions U.K.

646 Adjustments between settlor and trustees etc. U.K.

(1) A settlor is entitled to recover from—

(a) any trustee, or

(b) any other person to whom the income is payable in connection with the settlement,

the amount of any tax paid by the settlor which became chargeable on the settlor under section 624 or 629.

(2) For this purpose, the settlor may require [F2 an officer of Revenue and Customs] to provide the settlor with a certificate specifying—

(a) the amount of income in respect of which the settlor has so paid tax, and

(b) the amount of tax so paid.

(3) A certificate provided under subsection (2) is conclusive evidence of the facts stated in it.

[F3 (4) Subsection (5) applies if a settlor chargeable to tax under section 624 or 629 obtains a repayment by reason of the payment of the tax by—

(a) any trustee, or

(b) any other person to whom the income is payable by virtue of or as a result of the settlement.]

(5) The settlor must pay an amount equal to the [F4 repayment] to—

(a) the trustee, or

(b) the other person to whom the income is payable by virtue of or as a result of the settlement.

(6) If there are two or more such persons, the amount must be apportioned among them as the case may require.

[F5 (6A) For the purpose of subsection (5), the settlor may require an officer of Revenue and Customs to provide the settlor with a certificate specifying—

(a) that the settlor has obtained a repayment as mentioned in subsection (4), and

(b) the amount of the repayment.

(6B) A certificate provided under subsection (6A) is conclusive evidence of the facts stated in it.]

(7) [F6 Subject to subsections (6A) and (6B), any] question as to—

(a) the amount of a payment under subsection (5), or

(b) an apportionment to be made under subsection (6),

is to be decided by the [F7 tribunal and, notwithstanding the provisions of sections 11 and 13 of the Tribunals, Courts and Enforcement Act 2007, the decision of the tribunal is final].

(8) Nothing in sections 624 to 632 is to be read as excluding a charge to tax on the trustees as persons by whom any income is received.

Textual Amendments

F2 Words in s. 646(2) substituted (18.4.2005) by Commissioners for Revenue and Customs Act 2005 ss. 50, 53(1), {Sch. 4 para. 132(1)}; S.I. 2005/1126, art. 2(h)

F3 S. 646(4) substituted (16.12.2010) (with effect in accordance with s. 7(6) of the amending Act) by Finance (No. 3) Act 2010 (c. 33), s. 7(2)

F4 Word in s. 646(5) substituted (16.12.2010) (with effect in accordance with s. 7(6) of the amending Act) by Finance (No. 3) Act 2010 (c. 33), s. 7(3)

F5 S. 646(6A)(6B) inserted (16.12.2010) (with effect in accordance with s. 7(6) of the amending Act) by Finance (No. 3) Act 2010 (c. 33), s. 7(4)

F6 Words in s. 646(7) substituted (16.12.2010) (with effect in accordance with s. 7(6) of the amending Act) by Finance (No. 3) Act 2010 (c. 33), s. 7(5)

F7 Words in s. 646(7) substituted (1.4.2009) by The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56), art. 1(2), Sch. 1 para. 441

[F8 646ATrustees' expenses to be rateably apportioned U.K.

(1) This section applies if—

(a) in a tax year qualifying income arises under a UK settlement, and

(b) the qualifying income consists of charitable income and non-charitable income.

(2) If expenses of the trustees are to be set against the charitable income by virtue of section 484 of ITA 2007, the amount of those expenses which can used for that purpose is limited to the amount allocated to the charitable income.

(3) If—

(a) Chapter 8 of Part 9 of ITA 2007 applies in relation to the charitable income, and

(b) expenses of the trustees are to be used to reduce the charitable income for income tax purposes,

the amount of those expenses which can used for that purpose is limited to the amount allocated to the charitable income.

(4) For the purposes of subsections and (3) the amount of the expenses allocated to the charitable income is determined by apportioning them rateably between the charitable income and the non-charitable income.

(5) In this section—

• “charitable income” means income within section 628(1) or 630(1),

• “non-charitable income” means income which is not charitable income, and

• “qualifying income” and “UK settlement” have the same meaning as in section 628.]

Textual Amendments

F8 S. 646A inserted (6.4.2007 with effect as stated in s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), ss. 1027, 1034, Sch. 1 para. 560 (with transitional provisions and savings in Sch. 2)

F9 647Power to obtain information U.K.

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Textual Amendments

F9 S. 647 omitted (with effect in accordance with Sch. 23 para. 65 of the amending Act) by virtue of Finance Act 2011 (c. 11), Sch. 23 paras. 57(3), 65(1)(a) (with Sch. 23 paras. 50, 65(1)(b))

648 Income arising under a settlement U.K.

(1) References in this Chapter to income arising under a settlement include—

(a) any income chargeable to income tax by deduction or otherwise, and

(b) any income which would have been so chargeable if it had been received in the United Kingdom by a person domiciled [F10 and resident] there.

[F11 (2) But if, in a tax year, the settlor is not UK resident, references in this Chapter to income arising under a settlement do not include income arising under the settlement in that tax year in respect of which the settlor, if actually entitled to it, would not be chargeable to income tax by deduction or otherwise because of not being UK resident.

(3) And if, for a tax year, section 809B, 809D or 809E of ITA 2007 (remittance basis) applies to the settlor, references in this Chapter to income arising under a settlement include in relation to any relevant foreign income arising under the settlement in that tax year only such of it as is remitted to the United Kingdom (in that tax year or any subsequent tax year) in circumstances such that, if the settlor remitted it, the settlor would be chargeable to income tax.

(4) See Chapter A1 of Part 14 of ITA 2007 for the meaning of “remitted to the United Kingdom” etc.

(5) Where subsection (3) applies the remitted income is treated for the purposes of this Chapter as arising under the settlement in the tax year in which it is remitted.]

Textual Amendments

F10 Words in s. 648(1)(b) substituted (with effect in accordance with Sch. 46 para. 72 of the amending Act) by Finance Act 2013 (c. 29), Sch. 46 para. 49

F11 S. 648(2)-(5) substituted (retrospective to 21.7.2009) by Finance Act 2009 (c. 10), Sch. 27 paras. 13, 15(2)