Section 668 | Reduction in share of residuary income of estate

(1)This section applies if a person has an absolute interest in the whole or part of the residue of an estate at the end of the administration period and—

(a)the total of the person's shares of the residuary income of the estate in respect of that interest for all tax years (apart from this section), exceeds

(b)the total of all sums paid during or payable at the end of the administration period in respect of that interest to any person grossed up, where the estate is a UK estate, by the applicable rate (see subsections (5A) to (5C)).

(2)In the final tax year the person's share of the residuary income of the estate is to be reduced by that excess.

(3)If that excess is greater than the person's share of that income for the final tax year, that person's share of that income for the previous tax year is to be reduced, and so on.

(4)If subsection (3) applies all necessary adjustments and repayments of income tax are to be made.

(5A)The applicable rate by reference to which a sum within subsection (1)(b) is grossed up depends on the rate at which income tax was borne by the parts of the aggregate income of the estate from which section 679A treats the sum as having been paid.

(5B)If the same rate was borne by all the income from which section 679A treats the sum as having been paid, the applicable rate is that rate.

(5C)If different rates were borne by different parts of the income from which section 679A treats the sum as having been paid, each of those rates is the applicable rate by reference to which the corresponding part of the sum is grossed up.

(6)For the application of this section where two or more absolute interests in the whole or the same part of the residue are held successively by different persons, see section 671(5) and (6).