Corporation Tax Act 2010 section 610

Discretionary payments by trustees to companies

Section 610 sets out the corporation tax treatment when trustees of a settlement make a discretionary payment to a company, ensuring that such payments are excluded from the company's taxable income and that the deemed income tax credit cannot be recovered.

• Where trustees make a discretionary payment to a company chargeable to corporation tax (other than charities, eligible bodies or scientific research associations), the payment is ignored in calculating the company's income for corporation tax purposes.
• Although the company is treated as having paid income tax on the grossed-up amount of the payment under the income tax rules, that deemed income tax cannot be set off against the company's corporation tax or any other income tax liability.
• No repayment of the deemed income tax will be made to the company, meaning the tax borne by the trustees on the discretionary payment is a final charge.
• For non-UK resident companies, these rules apply only to the extent that the payment constitutes income of the company for corporation tax purposes; the term "payment" includes payments in money's worth.