Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Trusts, Settlements and Estates Manual

From
HM Revenue & Customs
Updated
, see all updates

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

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

This is how to calculate relief on dividend income.

Tax pool brought forward   Nil
     
Dividend received £90,000  
Tax credit £10,000  
Gross income £100,000  
Tax due on standard rate band (10%) £100 £100
Tax due at (dividend trust rate) (32.5%) £32,175 £32,175
Less non-payable tax credit   £10,000
Income available for distribution £67,725  
Total tax pool   £22,275
Amount distributed subject to PAYE £67,725  

 

The compensation payable to trustees is the lesser of

 

* tax at trust rate on the total payments which are treated as employment income £67,725 @ 40% = £27,090
     
* tax which the trustees have available in the ‘tax pool’ above   £22,275
The compensation payable is therefore   £22,275