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Don’t worry…
Key points
- The four points to remember when dealing with trusts: the tax rate; the standard rate band; management expenses and calculating the tax pool.
- Imposing higher rates of tax on discretionary trusts discourages the hoarding of income in the trust.
- Trustees are not entitled to personal allowances the starting rate band or the savings or dividend allowances.
- For discretionary trusts the standard rate band applies to the first £1 000 of income.
- Income used to pay trust management expenses is chargeable to tax at the basic rate.
- Trustees must maintain a ‘tax pool’ which takes into account the 45% tax credit that applies to distributions to beneficiaries.
We all love dealing with tax don’t we? We love the challenges helping clients cutting through the legislation and guidance and arriving at the correct answer. If we are honest of course we would probably also...
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