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HMRC internal manual

Trusts, Settlements and Estates Manual

Trust income: trustees receive mineral royalties

This guidance refers to mineral royalties received by trustees who are resident in the United Kingdom.

TCGA92 S201(1) provides that were a person is entitled to mineral royalties, he is treated as if he had a chargeable gain of one half of the royalty. The income half of the royalty is chargeable to income tax under Schedule D Case VI. The half treated as capital is chargeable to Capital Gains Tax.

The income half can be reduced by half of the expenses of management. No deductions whatsoever can be made from the half of the royalties treated as capital (CG71702). External customers can find this guidance at The treatment of leases entered into by trustees may be affected by Section 47 Settled Land Act 1925, so that the position may be more complicated than as set out above.

Refer all queries on mineral royalties received by trustees to Trusts & Estates Technical Bootle.

Taper relief

Receipt of mineral royalties within s201 is not a disposal of an asset and therefore taper relief is not due on the chargeable gain computed in accordance with that section.