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HMRC internal manual

Trusts, Settlements and Estates Manual

Trust income and gains: vulnerable beneficiaries: claims to special tax treatment: computing the amount of relief: income tax - trust management expenses

The trustees’ income tax liability is computed in the normal way for the purposes of calculating TQTI. Allowable trust management expenses are therefore dealt with in the usual way as well. However, where the trustees have any such expenses and their total income includes income which is not qualifying trusts income then any trust management expenses claimed must be apportioned.

The proportion of the total management expenses to be excluded from the calculation of TQTI is equal to the proportion of non-qualifying income to total income (qualifying and non-qualifying). See the example in TSEM3477.