Income Tax (Trading and Other Income) Act 2005 section 670

Applicable rate for determining assumed income entitlement (UK estates)

Section 670 explains how to determine the correct income tax rate (the "applicable rate") to use when calculating a beneficiary's assumed income entitlement from a UK estate in administration, as required by step 2 of the calculation in section 665(1).

• The applicable rate depends on the rate(s) of income tax borne by the estate's aggregate income for the tax year in question.
• Where all the estate's aggregate income bears tax at a single rate, that rate is used; where different parts bear tax at different rates, the rate corresponding to the income to which the beneficiary's share relates is used.
• If a beneficiary's share of residuary income relates to income taxed at more than one rate, each rate applies to the corresponding part of that income.
• Where more than one person has an absolute interest in the residue, the different parts of the estate's aggregate income taxed at different rates must be apportioned between them on a just and reasonable basis.