Income Tax (Trading and Other Income) Act 2005 section 679

Income from which basic amounts are treated as paid

Section 679 sets out the rules for determining which part of an estate's aggregate income a basic amount paid to a beneficiary is treated as coming from.

• Three assumptions (A, B and C) are applied in a prescribed order to match basic amounts to particular types of estate income bearing different rates of tax
• Where several beneficiaries share the residue, Assumption A allocates payments from the different parts of the estate's income in just and reasonable proportions reflecting their respective interests
• Assumption B then treats payments as coming first from income taxed at the highest rate, working down to income taxed at the lowest rate, with a special ordering rule for different categories of income bearing tax at 0%
• Where only some of the estate's income is treated as bearing tax under section 680, Assumption C applies first and requires basic amounts to be paid from income outside section 680 before income within it