The following Trusts and Inheritance Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
This guidance note explains how to calculate the income tax liability on the income of discretionary trusts and any trusts where income may be accumulated. It also covers the general principles of income tax that apply to all trusts and identifies the features specific to discretionary and accumulation trusts.
Trustees are together treated as if they were a single person (distinct from the individuals who are the trustees of the trust from time to time).
In order to calculate the income tax liability for any trust, you first have to determine what type of trust it is. It is essential when dealing with a trust for the first time to read the trust instrument. As explained inthe Taxation of trusts – introduction guidance note, the income tax treatment will fall into one of the two categories:
standard rate tax (bare trusts and all interests inpossession)
trust rate tax (discretionary and accumulation trusts)
The nature of an interest inpossession and the income tax treatment is detailed inthe Interest inpossession trusts – income tax guidance note. In the hands of the trustees, the income is taxed at basic and dividend rates, but it is ultimately charged on the beneficiary at his personal rates, regardless of when and whether the income is paid over to him.
Additional rates of tax apply to trustees’ accumulated or discretionary income. This is defined as income which either:
must be accumulated (because of a direction inthe trust instrument or under the general law)
is distributable at the discretion of the trustees or any other person
The latter category includes cases where there is discretion over whether, or the extent to which, the income is to be accumulated, as well as discretion over the persons to whom the income is to be paid, and how much of the income is to be paid to any person.
As a result of the discretionary power, the income of such trusts does not
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
Normal due dateIndividuals are required to pay any outstanding income tax and Class 4 National Insurance, Class 2 National Insurance, and capital gains tax due for the tax year by 31 January following the end of the tax year (ie 31 January 2021 for the 2019/20 tax year). From 6 April 2020, UK
The basic rule is that all benefits provided to an employee by reason of their employment are taxable unless there is a specific exemption or other rule that means they are not chargeable to tax.ExemptionsThe main exemptions for employee benefits are in ITEPA 2003, ss 227–326B (Pt 4).Below is an
From 6 April 2015, an individual can elect to transfer 10% of the personal allowance (£1,250 in 2020/21 and 2019/20) to the spouse or civil partner where neither party is a higher rate or additional rate taxpayer. The legislation calls this the ‘transferable tax allowance’ but the GOV.UK website
This guidance note provides an overview of what conditions need to be met before a business is entitled to treat VAT incurred as input tax. This note should be read in conjunction with the other notes in the ‘Claiming input tax’ subtopic. For a flowchart outlining the procedure for claiming input
To view our latest tax guidance content, sign in to Tolley Guidance or register for a free trial.