TSEM1565 - Introduction to trusts: types of trust: accumulation/discretionary trust

Use of term ‘accumulation/discretionary trust’

We use the term ‘accumulation/discretionary trust’ to describe any trust where the trustees can accumulate income or pay it at their discretion. This includes

  • trusts to accumulate (TSEM1566)
  • trusts where the trustees can pay income at discretion
  • accumulation and maintenance trusts (TSEM1567)
  • some mixed trusts (TSEM1569)

Tax consequences

Where the trustees have power to

  • accumulate income or
  • pay income at discretion or
  • accumulate income and pay income at discretion

the trust’s income is chargeable at special rates of tax under ITA/S479. See TSEM3010+.

From April 2023 the special trust rates are:-

  • 39.35% on dividend type income
  • 45% on all other income

For earlier years see TSEM3041.