Income Tax (Trading and Other Income) Act 2005 section 663

The applicable rate for grossing up basic amounts of estate income

Section 663 explains how to determine the correct tax rate to use when grossing up basic amounts of estate income that are charged on beneficiaries under sections 656 (UK estates) and 657 (foreign estates).

• The grossing-up rate depends on the income tax rate borne by the parts of the estate's aggregate income from which the basic amount is treated as having been paid
• Where all relevant parts of the estate income bore the same tax rate, that single rate is used to gross up the entire basic amount
• Where different parts of the estate income bore different tax rates, each rate is applied to gross up the corresponding portion of the basic amount separately
• Any part of the estate's aggregate income that falls within certain categories (section 664(2)(c) or (d)) is treated as bearing income tax at 0%