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HMRC internal manual

Trusts, Settlements and Estates Manual

HM Revenue & Customs
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Trust income and gains: beneficiaries: IIP beneficiary - measure of income for tax purposes - items disregarded

The income of an IIP beneficiary for tax purposes is the income arising to the trustees so far as he or she is entitled to it. That entitlement is the income of the trustees less any amounts to which such a beneficiary is not entitled. The beneficiary is not entitled to the following:

  • charges properly met by the trustees out of income, for example, annuities
  • income that the deed directs is to be applied for specific purposes, e.g. the redemption of a lease or mortgage
  • trust management expenses properly chargeable to income

So the above items are taken out of the reckoning for the IIP beneficiary’s income entitlement.

For guidance on IIP beneficiaries and trust management expenses, see TSEM8300+