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HMRC internal manual

Trusts, Settlements and Estates Manual

HM Revenue & Customs
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Non-resident trusts: beneficiary’s chargeability: trust income - Extra Statutory Concession B18

The precise text of the concession is at ESC B18 External users can find this guidance at

If certain conditions are met (TSEM10445), then a beneficiary receiving a discretionary income payment from a non-resident trust can ‘look through’ to the sources of trust income out of which the payment is made, and claim reliefs or exemption as if he or she received the income directly. For this purpose the payment is treated as having been made rateably out of all sources of income which arose to the trustees not earlier than six years before the end of the year in which the payment is made, on a last in first out basis. Credit is given to the beneficiary for tax paid by the trustees on the particular sources of income, and is taken into account in calculating the gross income treated as taxable on the beneficiary under the concession.

No credit is given for UK tax treated as paid on income received by trustees, which would not go in to a ‘tax pool’ (TSEM3020) if ITA/S494 applied, for example tax at the dividend ordinary rate (see TSEM3021). Although that tax is not repayable, it is not taken into account in calculating the gross income of the beneficiary.

Time limit: a beneficiary must claim relief under Extra Statutory Concession B18 within five years and ten months of the end of the tax year in which the payment was made.