GREIT08040 - Distributions: attribution rules: category (e) - other

If there is a balance remaining after attributing the distribution to Categories (a) to (d) (see GREIT08035), the remaining part of the distribution is out of other income, gains and anything else that is included in distributable reserves.

Example 7

The facts are as in Example 6 (see GREIT08035) but C decides to distribute 1,600 in March 2011 attributed wholly to 2010 profits.

The next step is as in Example 6. Taxable income (b) is 130, tax-exempt income (c) 100, tax- exempt gains (d) 180 b/f + 70 and other (e) is 320 b/f + 25, as before.

The final step is to attribute the 1,600 distribution by reference to the five categories. The first 900 is Category (a) and is a PID payable under deduction of basic rate tax (other than for gross payment cases – see GREIT08125). C decides to attribute nothing to Category (b) (taxable income) (but see below).

C has no choice about the balance of 700. This is attributed first to Category (c), tax-exempt income, up to the amount in the pot (100). This amount is a PID and payable under deduction of basic rate tax (other than for gross payment cases).

The balance of 600 is then attributed to Category (d), tax-exempt gains, up to the amount in tax-exempt gains pot (250). The next 250 of the distribution is therefore a PID, attributed to Category (d) and payable under deduction of tax (other than for gross payment cases).

The balance of 350 is then attributed to Category (e), other, up to the amount in the other pot (345). This is a normal dividend, payable gross.

That leaves 5 not yet attributed. The only other pot with anything left in it is taxable income (b), so C has to revisit the decision in the second step and must, if it wants to distribute 1,600, attribute some to Category (b). This remaining 5 is therefore attributable to (b) taxable income and is a normal dividend, payable gross.

The 125 distributable reserves to carry forward is therefore all (b) taxable income, and the other elements of the pot are all zero.

This table summarises the position: