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HMRC internal manual

Trusts, Settlements and Estates Manual

From
HM Revenue & Customs
Updated
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Trust management expenses: allowable expenses: specific items: interest etc. on tax bills

The general TMEs principles in Clay apply: to be allowable, the purpose or object of the interest etc. must be to confer benefit exclusively on the income beneficiaries. Illustrations of the general principles are as follows.

Interest on unpaid inheritance tax is not exclusively for the benefit of the income beneficiaries and so is not an allowable TME.

Interest and payable under Section 86 TMA 1970 where the interest relates to overdue income tax is an allowable TME.

Interest payable under Section 86 TMA 1970 where the interest relates to overdue capital gains tax is not an allowable TME.

Surcharge payable under S59C TMA 1970 where the surcharge relates to overdue income tax is an allowable TME.

Surcharge payable under S59C TMA 1970 where the surcharge relates to overdue capital gains tax is not an allowable TME.

Interest on surcharge where the surcharge relates to overdue income tax is an allowable TME.

Interest on surcharge where the surcharge relates to overdue capital gains tax is not an allowable TME.

Tax penalties are not allowable TMEs.

Interest on penalties is not allowable as a TME.

Refer any queries about interest as an allowable TME to HMRC Trusts & Estates Technical Bootle.