beta This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

Savings and Investment Manual

Collective investment schemes: unauthorised unit trusts: liability of trustees: relief for excess payments: foreign tax pool

Deemed payments and deemed deductions where trustees have claimed double tax relief

There are additional rules that apply to the treatment of deemed payments and deemed deductions in the hands of the unit holders where deemed payments are treated as made on or after 21 October 2009 and the trustees have claimed double tax relief. The rules are set out in ITA07/S943A to 943D. The rules apply where:-

* the trustees of a UUT are treated under section 941(2) of ITA2007 as making a distribution in a tax year,
* there is a reduction in the income pool in that tax year by Step 1 in section 942(5) of ITA2007, and

In any such case then part of the distribution the trustees are treated as making may be treated in the unit holders’ hands as overseas income. The amount of the deemed overseas income will be the lower of the reduction in the income pool in the year or the amount of income on which foreign tax relief was claimed in previous years under section 788 or 790(1) of the Income and Corporation Taxes Act 1988 (ICTA 1988) grossed up at the basic rate. This prevents repayment of the tax related to the foreign element of the deemed deduction, and ensures that the rules restricting relief for DTR on foreign income apply properly to distributions from UUTs sourced from overseas income.