After section 646 insert—

“646ATrustees' expenses to be rateably apportioned

(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.”