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Effect of reduction of tax credit.
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66.—(1) Nothing in this section shall affect the amount of income for the purposes of Schedule F which is represented by a distribution.
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(2) In this section the relieved amount for a year of assessment in relation to an individual is an amount determined by the formula
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where—
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A is the aggregate amount of income on which the individual is chargeable under Schedule F for that year of assessment in respect of distributions to which section 64 applies,
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B is the aggregate amount of the tax credits which are included in the amount referred to at A, and
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C is the standard rate per cent. for the year of assessment.
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(3) (a) An individual whose income for a year of assessment includes a distribution or distributions (in this subsection referred to as the said distribution or the said distributions) to which section 64 applies shall be assessed and charged to tax as if—
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(i) the highest part of his income were the relieved amount, and
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(ii) the next highest part of his income were the excess (in this section referred to as the said excess) of the amount of income represented by the said distribution (or the aggregate of the said distributions as the case may be) over the relieved amount.
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(b) Notwithstanding the provisions of section 64, the total amount of the tax credits which, by virtue of section 88, an individual may claim to have set against the tax charged on his income or to have paid to him, shall—
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(i) in relation to so much of the relieved amount as is charged to tax at a rate or rates higher than the reduced rate be an amount equal to the amount of tax so charged,
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(ii) in relation to that part of the said excess which is charged to tax at a rate or rates higher than the reduced rate be a sum equal to income tax at the standard rate for the year of assessment in which the distribution is made on that part of the said excess,
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(iii) in relation to so much of his income which is represented by the said distribution (or the aggregate of the said distributions as the case may be) as is charged to tax at the reduced rate be tax at the reduced rate on the amount so charged together with tax on the same amount at a rate per cent. equal to 
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where—
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D is the difference between the standard rate per cent. and the reduced rate per cent. for the year of assessment and for this purpose “the reduced rate per cent.” for a year of assessment means 26 where the reduced rate for that year is 26 per cent. and similarly with reference to the reduced rate per cent. for a year of assessment for which the reduced rate is other than 26 per cent.,
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E is the rate of imputation per cent. for the year of assessment, and for this purpose “the rate of imputation per cent.” for a year of assessment means an amount determined by the formula
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where A and B have the same meanings as in subsection (2), and
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F is the standard rate per cent. for the year of assessment, and
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(iv) in relation to so much of his income which is represented by the said distribution (or the aggregate of the said distributions as the case may be) as is not included in his taxable income be a proportionate part of the tax credit which under section 64 is applicable to the said distribution (or, as the case may be, a proportionate part of the aggregate amount of the tax credits which under section 64 are applicable to the said distributions).
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