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HMRC internal manual

Trusts, Settlements and Estates Manual

Trusts for particular purposes: compensation under ESC A68 - example using savings income - years to 2009-2010

The trustees must meet the conditions of the concession (TSEM5610).

This is how to calculate relief on savings income.

Tax pool brought forward   Nil
Interest received £100,000  
Tax on standard rate band (20%) £1,000 £200
Tax due at trust rate (40%) £99,000 £39,600
Income available for distribution £60,200  
Total Tax pool   £39,800
Amount distributed subject to PAYE £60,200  


The compensation payable to trustees is the lesser of


* tax at trust rate on the total payments which are treated as employment income £60,200 @ 40% = £24,080
* tax which the trustees have available in the ‘tax pool’ above   £39,800
The compensation payable is therefore   £24,080