Trust income and gains: the charge on trustees - amount of trust income chargeable
Basic etc. rate charge on trustees
Trustees of a settlement are chargeable at the basic rate or dividend ordinary rate on trust income without any deduction for trust management expenses.
They may also be chargeable at the higher ‘special rates for trustees’.
Interest in possession trust
Trustees of an IIP are not normally chargeable at the special trust rates. The exception is when the trustees have certain capital receipts that are deemed to be income for tax purposes. See TSEM3201.
Accumulation or discretionary trust
If the trust is within ITA/S479, the special trust rates apply to income after trust management expenses. The special trust rates are the divident trust rate in respect of dividend type income and the trust rate in respect of other income. TSEM3019 explains which income is within ITA/S479.
Reid’s Trustees v CIR 14 TC 512. TSEM7055