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HMRC internal manual

Trusts, Settlements and Estates Manual

Trust income: FOTRA securities - resident trustees

FOTRA stands for ‘Free of Tax to Residents Abroad’. The securities involved are British government gilts. From 6 April 1998 all interest on such securities is paid gross.

Trustees of non-bare trusts

Trustees in receipt of FOTRA income need to know whether or not to Self-Assess liability on the trust return. ITTOIA/S715 provides that where:

  • all the beneficiaries are not ordinarily resident in the UK (where securities were acquired before 6 April 2013) or
  • all the beneficiaries are not resident in the UK (where securities were acquired after 5 April 2013).

the trustees are treated as being the beneficial owner of the securities, and exempt from tax on the income. S715(3) and (4) define ‘beneficiaries of the trust’ widely so as to cover beneficiaries of discretionary and accumulation trusts as well as IIP beneficiaries. The trustees should exclude from the income from the trust return income.

In any other circumstances the interest is taxable. It must go on the trust returns.