Trustees ― payment of income and capital gains tax

Produced by a Tolley Trusts and Inheritance Tax expert
Trusts and Inheritance Tax
Guidance

Trustees ― payment of income and capital gains tax

Produced by a Tolley Trusts and Inheritance Tax expert
Trusts and Inheritance Tax
Guidance
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This guidance note considers how and when trustees pay income tax and capital gains tax (CGT).

Income and CGT are paid by trustees in a number of ways. These are:

  1. •

    collection at source throughout the year

  2. •

    payments on account calculated by reference to the tax due for the previous tax year

  3. •

    balancing payments for the tax year (tax liability less tax already deducted at source or paid on account)

Payments on account ― income tax

Payments on account are required where:

  1. •

    the amount payable at the end of the previous year was more than £1,000, and

  2. •

    the amount collected at source was less than 80% of the total income tax liability

TMA 1970, s 59A(1); SI 1996/1654

Each payment on account is 50% of the previous tax year’s tax liability, less the tax collected at source.

Payments on account do not cover CGT as capital gains are unlikely to remain at the same level year on year; whereas it is

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