Income Tax Act 2007 section 941

Deemed payments to unit holders and deemed deductions of income tax

Section 941 establishes the deduction at source framework for unauthorised unit trusts (UUTs), treating certain amounts as payments to unit holders with income tax deemed to have been deducted.

• Where a unit holder is subject to income tax, any grossed-up amount charged to tax under the relevant ITTOIA provisions is treated as a payment made by the UUT trustees to the unit holder.
• In such cases, the trustees are treated as having deducted income tax at the basic rate for the tax year from that deemed payment.
• Where a unit holder is subject to corporation tax instead, the trustees are similarly treated as having deducted income tax at the basic rate from the deemed annual payment to the unit holder.
• The section applies the same basic rate deduction principle regardless of whether the unit holder pays income tax or corporation tax, ensuring consistent treatment across both tax regimes.