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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: relief for overseas tax - discretionary trust

These instructions apply to taxed overseas income received by a discretionary or accumulation trust. The trustees can claim double taxation relief in respect of overseas tax that qualifies for relief. The trustee’s marginal rate is the rate applicable to trusts, or where it applies, the dividend trust rate. INTM367780+ onwards has instructions about calculating relief.

A paying agent may have allowed provisional tax credit relief on overseas income. The computation of double taxation relief must reflect this.

Tax pool

The ICTA88/S687 tax pool must contain only UK tax paid or suffered by deduction. It must not include UK tax covered by credit for overseas tax.

ICTA88/S687 (3)(a) effectively withdraws the double taxation relief when the trustees make a discretionary payment to a beneficiary.