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HMRC internal manual

Trusts, Settlements and Estates Manual

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HM Revenue & Customs
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Trust income and gains: the charge on trustees: the tax pool - amounts entering

Tax that trustees pay enters the ‘tax pool’ as follows:

  • tax on income and deemed income charged at the trust rate, apart from tax on certain chargeable event gains
  • tax on certain chargeable event gains that have tax treated as paid at the basic rate (or savings rate for years where this rate applies) at a rate equal to the difference between the trust rate and the basic rate (or savings rate for years where this rate applies)
  • tax on income and deemed income charged at the dividend trust rate, at a rate equal to the difference between the dividend trust rate and the dividend ordinary rate.
  • tax on income and deemed income charged at the basic rate or at the savings rate (for years where this rate applies) as a result of the standard rate band

(in all the above, references to income do not include income the tax on which is reduced in accordance with the vulnerable beneficiaries rules)

  • tax on income and deemed income determined in accordance with the vulnerable beneficiaries rules.

The relevant legislation is at ITA/S498.

Tax paid by the trustees of a settlor interested trust does not enter the tax pool as it is treated as paid on behalf of the settlor - see TSEM4512.

Trusts for minor child of settlor - tax paid by the trustees enters the tax pool in the normal way - see TSEM4512.

Tax paid by the trustees while the trust is non-resident does not enter the tax pool. Tax goes into the pool only if it is tax paid at a time when the trustees were UK resident.