Trusts for particular purposes: discretionary payments taxed as employment income - 2010-2011 onwards - example
The trustees must meet the conditions of the statute (TSEM5655).
This is how relief is calculated
|2010 - 2011||Tax Pool|
|Tax pool brought forward as reduced by compensation paid under ESC A68|
|Tax due at standard rate and trust rate (20% and 50%) before relief under ITA/S496B||£ 49,700||£49,700|
|Amount of tax pool before relief under ITA/S496B||£50,700|
|Amount distributed subject to PAYE||£ 50,000|
|Tax pool carried forward||£25,7000|
|*The relief due to trustees is the lesser of|
|* Tax at trust rate, on the total payments in the year which are treated as employment income||£50,000 @ 50% =||£25,000|
|* Tax which the trustees have available in the ‘tax pool’ above||£50,700|
|The relief given is therefore||£25,000|
If the claim for relief is made in the tax return for 2010-2011 the tax due for the year is £25,700.
If the claim is made outside the return the tax due for 2010-2011 is £50,700 of which £25,000 will be repaid on the making of a valid claim.