Corporation Tax Act 2009 section 951

Reduction in share of residuary income of estate

Section 951 deals with how a company's share of the residuary income from an estate is reduced at the end of the administration period where its cumulative income share exceeds the amounts actually paid or payable in respect of its interest.

• Where a company with an absolute interest in the residue of an estate has been allocated more residuary income across all tax years than the grossed-up total of sums actually paid or payable, the excess must be clawed back by reducing the company's share of residuary income
• The reduction is applied first to the final accounting period, and if the excess is larger than that period's income share, it is carried back to earlier accounting periods in reverse order, with all necessary corporation tax adjustments and repayments made
• For UK estates, the sums paid or payable are grossed up by the applicable income tax rate, determined by reference to the rate of income tax borne by the parts of the estate's aggregate income from which the sums are treated as having been paid
• Where all of the relevant estate income bore the same rate of income tax, that single rate is used for grossing up; where different parts bore different rates, each rate is applied to the corresponding part of the sum