Commentary

I5.1008 Trust capital receipts taxed as income

IHT, trusts and estates

I5.1008 Trust capital receipts taxed as income

I5.1008 Trust capital receipts taxed as income

Certain receipts which are capital in trust law are deemed to be income for tax purposes1. These provisions do not apply to:

  1.  

    •     to accumulation or discretionary settlements (in whose hands it is income anyway2)

  2.  

    •     to charitable trusts or unit trusts3, or

  3.  

    •     to income from property held by a superannuation fund relating to undertakings outside the UK4.

The capital receipts that are treated as income, are as follows5:

  1.  

    (i)     distributions (known as 'qualifying distributions' before 6 April 2016) where a company purchases its own shares6 (see D6.605)

  2.  

    (ii)     accrued income profits

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