Corporation Tax Act 2009 section 962

Income from which basic amounts are treated as paid

Section 962 sets out the rules for determining which part of an estate's aggregate income a basic amount is treated as being paid from, using a series of ordering assumptions.

• Where there are multiple beneficiaries, payments in respect of their basic amounts are allocated across different parts of the estate's aggregate income in just and reasonable proportions reflecting their different interests (Assumption A).
• Payments are then treated as made from the highest-taxed income first, working down to the lowest-taxed income (Assumption B), with a special ordering rule for different types of income taxed at 0%.
• Where the estate has a mix of income within section 963 (taxed at the applicable rate) and income outside section 963, the basic amount is treated as paid first from income outside section 963 before income within it (Assumption C).
• Assumptions A and B are then applied separately — first to the non-section 963 income, and then to the section 963 income — to determine the precise source of each basic amount.