Corporation Tax Act 2009 section 942

Foreign estates

Section 942 explains how corporation tax is charged on estate income that a corporate beneficiary receives from a foreign estate in administration.

• For foreign estates, corporation tax applies to the amount of estate income treated as arising in the company's accounting period.
• Where the income is paid from sums treated as bearing income tax, the basic amount is grossed up at the applicable rate, and the grossed-up amount is treated as having had income tax deducted at that rate.
• Where the income is not paid from sums treated as bearing income tax, the taxable amount is simply the basic amount of that income with no grossing up.
• The distinction between these two categories determines both the amount charged and whether the company can claim credit for income tax treated as deducted.