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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: trustees’ fees: trustees other than the Public Trustee: corporate trustees

It is understood that corporate trustees normally charge their fees to capital. However the terms and conditions of a third party provider cannot override the trust deed or trust law.

For accumulation/discretionary trusts general trust law prevails. The key issue will be whether an identifiable element of the services provided was purely for the benefit of the income beneficiaries. If the answer is yes, then an apportionment to income can be made, regardless of where the fees are paid from.

For an interest in possession trust the provisions of the trust deed take priority. If the trust deed contains a provision saying that the allocation of the fees will follow the trustee company’s terms and conditions, then such fees will be properly chargeable to capital and not allowable as TMEs. If the trust deed provides that the entire fee should go against income the entire expense would be an allowable trust management expense in computing the taxable income of the beneficiary. If the trust deed is silent then general trust law prevails. The key issue will be whether an identifiable element of the services provided was purely for the benefit of the income beneficiaries. If the answer is yes, then an apportionment to income can be made, regardless of where the fees are paid from.