Income Tax Act 2007 section 680

Interest on securities involving accrued income losses: foreign trustees

Section 680 provides an exemption from the settlor-attribution rules where non-UK resident trustees hold securities with accrued income losses, and the settlor would have benefited from the general exemption under section 679 had the trustees been UK resident.

• The section applies where trustees of a settlement are non-UK resident throughout a tax year in which an interest period (or part of one) falls, and their income includes interest from the relevant securities
• The interest must fall due at the end of the interest period, and it must be the case that the interest would have been wholly or partly exempt under section 679 had the trustees been UK resident during part of the tax year
• Where these conditions are met, the settlor is not liable to income tax under the settlements income attribution rules (Chapter 5 of Part 5 of ITTOIA 2005) on the portion of the interest that would have qualified for exemption under section 679
• Where the interest period does not end on an interest payment day, section 637 applies to treat accrued income losses as payments in the next interest period