Section 636 | Calculation of undistributed income

(1)For the purposes of section 635, ... income arising under a settlement in any tax year is treated as ... income which has not been distributed so far as it exceeds the total amount of—^F1

(a)the sums to which subsection (2) applies,

(b)the expenses to which subsection (4) applies, and

(c)if the trustees of the settlement are trustees for charitable purposes, the amount to which subsection (6) applies.

(2)This subsection applies to ... sums paid in the tax year to any persons by the trustees of the settlement that are payments of ... income, or sums treated as representing ... income, and that—^F2F3F4

(a)are treated in that year (otherwise than under section 633) as the income of those persons for income tax purposes, or

(b)would be treated as mentioned in paragraph (a) if those persons were ... resident in the United Kingdom and the sums had been paid to them there.^F5F6F7

(3)Subsection (2) is subject to section 637(1).

(4)This subsection applies to any expenses of the trustees of the settlement paid in the tax year which, in the absence of any express provision of the settlement, would be properly chargeable to ... income.^F8

(5)Subsection (4)—

(a)does not apply to expenses so far as they are included in the sums mentioned in subsection (2), and

(b)is subject to section 637(2) to (7).

(6)This subsection applies to the amount by which—^F9F10

(7)This subsection applies to the following provisions of ITA 2007—^F11F12

section 521(4) (gifts entitling donor to gift-aid relief),

section 522(5) (gifts of money from companies),

section 523(5) (payments from other charities),

section 523A (legacies)

section 524 (profits etc of charitable trades),

section 529 (profits from fund-raising events),

section 530 (profits from lotteries),

section 531 (property income etc),

section 532 (savings and investment income),

section 533 (public revenue dividends),

section 536 (miscellaneous income), and

section 537 (income from estates in administration).