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HMRC internal manual

Trusts, Settlements and Estates Manual

HM Revenue & Customs
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Trusts for particular purposes: discretionary payments taxed as employment income - 2010-2011 onwards

The statutory replacement for ESC A68 is designed to give the same amount of relief. Relief is available under ITA/S496B when the trustees of a UK-resident settlement make a discretionary employment income payment. There are two main differences between the statute and the concession:

  • Unlike the compensation paid under the concession, the relief is given as a repayment (or set-off) of income tax. The relief can therefore be given by a claim in the SA Return and may attract repayment supplement (see TSEM5670)
  • The definition used for ‘employee benefit settlement’ is slightly wider than the description of employee benefit trust in ESC A68. A trust may qualify for the statutory relief even where part of the settled funds were provided by someone other than the employer.