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HMRC internal manual

Trusts, Settlements and Estates Manual

Trusts for particular purposes: the Thalidomide Trust - payments to beneficiaries up to 4 August 2004

The Thalidomide Trust is a charitable trust. Charitable trusts are not taxed on theirincome, but payments to beneficiaries still fall within the normal rules.

Up to 4 August 2004, income payments from the Thalidomide Trust to beneficiaries werediscretionary. As such they were subject to the same rules that govern payments from alldiscretionary trusts (TSEM3755-3756).

Income payments from the Trust counted towards the beneficiaries’ taxable income andreduced their level of entitlement to tax credits.

The beneficiaries were taxed on the payments at their marginal rate of tax with creditgiven at 34% (40% from 6 April 2004) under ICTA/S687(1) and (2).