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HMRC internal manual

Trusts, Settlements and Estates Manual

Trust income and gains: beneficiaries: beneficiary entitled to trust income - trust that trades or has rental income - Capital Allowances

If the net profit after allowable trading expenses is £8,000 and the trustees can claim £3,000 Capital Allowances for tax purposes, the beneficiary’s measure of income for tax purposes is taken to be £5,000. Just as a credit for basic rate tax paid by the trustees is carried through to the beneficiary, so is the benefit of Capital Allowances in respect of qualifying expenditure.