Income Tax Act 2007 (c. 3)

Part 9 U.K. Special rules about settlements and trustees

Chapter 9 U.K. Unauthorised unit trusts

504 Treatment of income of unauthorised unit trust U.K.

(1) This section applies for income tax purposes in relation to an unauthorised unit trust if the trustees are UK resident.

(2) If income arises to the trustees, the income is treated as the income of the trustees and not of the unit holders.

(3) If income tax on any part of the income would apart from this subsection be charged at the dividend ordinary rate F1 ..., income tax on that part of the income is charged at the basic rate instead.

(4) None of the following applies in relation to the income—

(a) section 479,

(b) [F2 sections 397(1) and 397A(2)] of ITTOIA 2005 (tax credits for qualifying distributions),

(c) section 399(2) and (6) of ITTOIA 2005 (person not entitled to tax credit treated as having paid income tax), and

(d) section 400(2) and (3) of ITTOIA 2005 (person whose income includes non-qualifying distribution treated as having paid income tax).

(5) Sections 494 and 495 do not apply in relation to payments made by the trustees.

Textual Amendments

F1 Words in s. 504(3) omitted (21.7.2008 with effect in accordance with Sch. 1 para. 65 of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 1 para. 23

F2 Words in s. 504(4)(b) substituted (21.7.2008 with effect in accordance with s. 34(2) of the amending Act) by Finance Act 2008 (c. 9), Sch. 12 para. 25

505 Relief for trustees of unauthorised unit trust U.K.

(1) This section applies if in a tax year the trustees of an unauthorised unit trust are treated as making a deemed payment.

(2) The trustees are entitled to a relief for the tax year equal to the gross amount of the payment.

(3) The relief is given by deducting that gross amount in calculating the trustees' net income for the tax year (see Step 2 of the calculation in section 23).

(4) But this is subject to subsections (5) to (7) F3 ....

(5) Relief is not to be given for the payment so far as it is ineligible for relief.

(6) For the purpose of determining the extent to which the payment is ineligible for relief (if at all) section 450 applies in relation to the payment as that section applies in relation to a payment to which section 449 applies.

(7) The total amount of the reliefs given under this section to the trustees for the tax year cannot be greater than the amount of the trustees' modified net income for the tax year (see section 1025).

(8) In this section F4 ... “deemed payment” and “the gross amount” have the meanings given by section 941(6).

Textual Amendments

F3 Words in s. 505(4) omitted (21.7.2008 with effect in accordance with s. 66(8) of the amending Act) by virtue of Finance Act 2008 (c. 9), s. 66(4)(l)(vi)

F4 Words in s. 505(8) omitted (21.7.2008 with effect in accordance with s. 66(8) of the amending Act) by virtue of Finance Act 2008 (c. 9), s. 66(4)(l)(vi)

F5 506 Special rules for trustees affected by section 733 of ICTA U.K.

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Textual Amendments

F5 S. 506 omitted (21.7.2008 with effect in accordance with s. 66(8) of the amending Act) by virtue of Finance Act 2008 (c. 9), s. 66(4)(l)(vii)