HMRC internal manual

Trusts, Settlements and Estates Manual

TSEM8520 - Trust management expenses: settlor-interested trusts: IIP trust

The settlor of a ‘settlor-interested’ IIP trust gets no relief for TMEs. In ITTOIA/S624 ‘income which arises under a settlement’ in a settlor-interested trust is the income arising to the trustees, that is, the gross income before the trustees pay trust management expenses.

This applies whether or not the settlor is a beneficiary of an IIP trust. If the settlor is also the IIP beneficiary, ITTOIA/S624 deems all the income arising to the trustees to be the settlor’s, and does not explicitly restrict the charge to that part of the trustees’ income which does not already belong to the settlor in general law (the trust management expenses).