Income Tax (Trading and Other Income) Act 2005

668 Reduction in share of residuary income of estate U.K.

(1) This section applies if a person has an absolute interest in the whole or part of the residue of an estate at the end of the administration period and—

(a) the total of the person's shares of the residuary income of the estate in respect of that interest for all tax years (apart from this section), exceeds

(b) the total of all sums paid during or payable at the end of the administration period in respect of that interest to any person (grossed up where subsection (5) applies).

(2) In the final tax year the person's share of the residuary income of the estate is to be reduced by that excess.

(3) If that excess is greater than the person's share of that income for the final tax year, that person's share of that income for the previous tax year is to be reduced, and so on.

(4) If subsection (3) applies all necessary adjustments and repayments of income tax are to be made.

(5) For the purposes of calculating the total mentioned in subsection (1)(b)—

(a) if the estate is a UK estate in relation to a tax year in which a sum is paid, the sum is to be grossed up by reference to the basic rate for that year, and

(b) if the estate is a UK estate in relation to the final tax year, a sum payable at the end of the administration period is to be grossed up by reference to the basic rate for that year.

(6) For the application of this section where two or more absolute interests in the whole or the same part of the residue are held successively by different persons, see section 671(5) and (6).