Special provisions apply where in a tax year1 income arises to the trustees of a settlement and, before being distributed, some or all of that income is income of a beneficiary2. In such a case, expenses of the trustees can be used to reduce the beneficiary's income for income tax purposes only so far as the expenses are incurred by the trustees in the current tax year or an earlier tax year and where, by the expenses being chargeable to income, the beneficiary's entitlement to income is reduced by reference to the expenses3.
Where the beneficiary is not liable to
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