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HMRC internal manual

Trusts, Settlements and Estates Manual

Trust management expenses: accumulation/discretionary trusts: order of set-off

ITA/S486(1) provides the order in which expenses are to be set against income. Allowable TMEs are set against income chargeable to the special rates of tax in ITA/S479 in this order:

  1. against income that carries a non-payable ordinary dividend rate tax credit or notional tax credit of 10%, for example dividends or stock dividends from UK companies, then
  2. any excess against other dividend income not within 1, then
  3. any excess against savings income, finally
  4. any excess against other income.

See example in TSEM8255.