Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Trusts, Settlements and Estates Manual

From
HM Revenue & Customs
Updated
, see all updates

Trust management expenses: allowable expenses: specific items: investment advice

The cost of taking investment advice is normally chargeable to capital under general principles (Carver v Duncan - see TSEM8115), and so not an allowable TME.

The Court of Appeal decision in HMRC v Peter Clay confirms the normal position:

‘The first question is whether the expenses incurred in connection with the investment of income were incurred before or after the trustees had made the decision to accumulate that income. If the expenses were incurred after the trustees had made the decision to accumulate, they cannot, be said to be expenses incurred exclusively for the benefit of the income beneficiaries. They must be charged against the capital.’

It also takes into account the following position:

‘If the expenses were incurred before the trustees had made the decision to accumulate - and can be properly be characterised as expenses incurred for the purpose of temporarily investing income while deciding whether or not to distribute that income to the income beneficiaries - then (at least to the extent that the income was, in the event, distributed and not accumulated) the expenses could be said to have been incurred exclusively for the benefit of the income beneficiaries.