(1) This section applies if a person's income in a tax year includes a non-qualifying distribution.
(2) The person is treated as having paid income tax at the dividend ordinary rate on the amount or value of the distribution.
(3) The income tax treated as paid under subsection (2) is not repayable.
(4) If the distribution is income to which section 686 of ICTA applies (accumulation and discretionary trusts: special rates of tax), the trustees' liability for income tax at the dividend trust rate on the amount or value of the whole or any part of the distribution is reduced.
(5) The amount of the reduction is equal to income tax at the dividend ordinary rate on so much of the distribution as is assessed at the dividend trust rate.
(6) In this section and section 401 “non-qualifying distribution” means a distribution which is not a qualifying distribution.
This Act comes into force on 6 April 2005 and has effect, for the purposes of income tax for the year 2005–06 and subsequent tax years, and for the purposes of corporation tax for accounting periods ending after 5 April 2005: see s 883; for transitional provisions and savings see Sch 2 hereto.
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