Commentary

I5.1301 Income tax for beneficiaries generally

IHT, trusts and estates

I5.1301 Income tax for beneficiaries generally

Division I5.13     Income tax and CGT—beneficiaries of settlements

Income tax for beneficiaries

I5.1301 Income tax for beneficiaries generally

This Division deals with the treatment of any sums in which a beneficiary has an interest under a trust, or which are paid to or applied for the benefit of a beneficiary under a trust.

A trust may be created by a settlement inter vivos, or under a Will or intestacy. In the case of a Will or intestacy the provisions to be described apply as from the completion of administration.

Where the beneficiary has a vested interest in funds in the settlement, the trustees may authorise the income from those funds to be paid direct to the beneficiary. In such circumstances, the income is assessed on the beneficiary and not on the trustees (see I5.1003).

The following form part of the total income of the beneficiary:

  1.  

    •     income in which the beneficiary has a vested interest, whether this is paid to him or accumulated (see I5.1303)

  2.  

    •     sums in the nature of income applied for the benefit of the beneficiary under the terms of the trust (see I5.1306), and

  3.  

    •     sums in the nature of income paid to or applied for the benefit of

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