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HMRC internal manual

Trusts, Settlements and Estates Manual

From
HM Revenue & Customs
Updated
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Trust income and gains: beneficiaries: beneficiary entitled to trust income - grossing up

If the trustees receive income that is taxed at source, or if they pay tax on it under self assessment, the beneficiary will receive a net amount. But he or she is entitled to the gross amount. Consequently he or she is taxable on the gross amount.

For example, the trustees have gross bank interest of £1,000 on which tax is deducted at source £200.They pay £800 to the beneficiary. The beneficiary is entitled to the gross amount £1,000, and is taxable on that amount.