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Returning the payment - settlor interested cases

If the non-resident trust is settlor interested and the settlor is chargeable on the income arising to the trustees (TSEM4200) then we do not want to charge the income paid to a discretionary beneficiary. This is achieved in different ways.

Up to 5 April 2006 - Discretionary income payments to beneficiaries were not regarded as income of the beneficiary.

From 6 April 2006 - where the settlor is the beneficiary discretionary income payments continue not to be regarded as income of the beneficiary (who is also the settlor).

From 6 April 2006 - where the beneficiary is someone other than the settlor the beneficiary enters the discretionary income payment on the Trusts etc supplementary pages. »Ê¹ÚÌåÓýapp amount of the income is the amount received. »Ê¹ÚÌåÓýapp beneficiary is treated as having paid tax at the higher rate on the payment so no further liability arises to them. However, the tax treated as paid is ring-fenced and can neither be repaid to the beneficiary nor set against any liability arising from other income of the beneficiary.

Returning the payment - non settlor interested cases

A beneficiary who receives a discretionary payment of income from a non-resident trust that is non-settlor interested shows it on the Foreign pages of the SA return. »Ê¹ÚÌåÓýapp amount of income returned is the amount received with no tax credit. »Ê¹ÚÌåÓýapp beneficiary must not include any UK or foreign tax, relating to the trust income, in the SA computation.

»Ê¹ÚÌåÓýapp beneficiary may be entitled to relief for tax suffered by the trustees. If the beneficiary wants to claim, they can note this in the additional information box. »Ê¹ÚÌåÓýapp claim is under Extra-statutory Concession B18.

Internal user should refer all claims to mailbox-HO Technical, Trusts (BT&C) .»Ê¹ÚÌåÓýappy decide whether any relief is due, and if so, calculate the amount. »Ê¹ÚÌåÓýapp claim is free-standing, and is outside Self Assessment and it does not go in the SA computation.