Income Tax (Trading and Other Income) Act 2005

277 (1) Amend section 686 (accumulation and discretionary trusts: special rates of tax) as follows.

(2) In subsection (1) for “Schedule F” substitute “dividend”.

(3) In subsection (1AA)(a)—

(a) for “Schedule F”, in the first place where it occurs, substitute “distribution”, and

(b) for “Schedule F”, in the second place where it occurs, substitute “dividend”.

(4) In subsection (1A) for “Schedule F” substitute “dividend”.

(5) In subsection (2AA) for “Schedule F” substitute “dividend”.

(6) In subsection (5A) for ““Schedule F type” substitute ““distribution type” and for paragraphs (a) to (g) substitute—

“(a) income chargeable under Chapter 3 of Part 4 of ITTOIA 2005 (dividends etc. from UK resident companies etc.);

(b) income chargeable under Chapter 4 of that Part (dividends from non-UK resident companies);

(c) income treated as arising to the trustees under Chapter 5 of that Part (stock dividends from UK resident companies);

(d) income chargeable under Chapter 6 of that Part (release of loan to participator in close company);

(e) a relevant foreign distribution chargeable under Chapter 8 of Part 5 of that Act (income not otherwise charged); or

(f) any amount which, by virtue of section 686A of this Act, is treated for the purposes of the Tax Acts as if it were income to which this section applies.”

(7) After that subsection insert—

“(5B) In subsection (5A) “relevant foreign distribution” means any distribution of a company not resident in the United Kingdom which—

(a) is not chargeable under Chapter 4 of Part 4 of ITTOIA 2005, but

(b) would be chargeable under Chapter 3 of that Part if the company were resident in the United Kingdom.”

(8) In subsection (6) for “Part XVI” substitute “Chapter 6 of Part 5 of ITTOIA 2005”.