Income Tax Act 2007 section 943A

Treatment of cases involving double tax relief

Section 943A sets out when deemed distributions from unauthorised unit trusts are treated as foreign income eligible for double tax relief, rather than as UK income.

• The section applies where trustees of an unauthorised unit trust make a deemed distribution, there is a reduction in the income pool in that tax year, and the double tax relief pool at the start of the year is greater than zero.
• When these conditions are met, the "foreign element" of the deemed income is reclassified from UK income to foreign income, and the corresponding deemed tax deduction is treated as overseas tax rather than UK tax.
• The foreign income is treated as arising from a territory with which the UK has no double taxation agreement in place.
• A reduction in the income pool occurs when the pool amount at the start of the tax year is greater than the pool amount at the start of the following tax year.