»Ê¹ÚÌåÓýapp

This extra-statutory concession applies only to employee trusts, which are defined as ‘discretionary trusts created by funds provided by employers for the benefit of their employees…â€�. »Ê¹ÚÌåÓýapp concession applies in respect of discretionary payments made for tax years up to and including 2009-2010. For subsequent years the concession is withdrawn and replaced by statute. Guidance on the statute is at TSEM5650 onwards.

Claims under the concession for years to 2009-2010 should be accepted within the normal time limits for claims at TMA/S43.

»Ê¹ÚÌåÓýapp income of discretionary trusts is charged to tax on the trustees at the special trust rate see TSEM1565. When the trustees make a payment out of trust income to beneficiaries, the beneficiaries are normally given credit (under ITA/S494(3)) for the tax paid by the trustees.

Trusts set up by employers for the benefit of their employees are generally discretionary trusts. »Ê¹ÚÌåÓýapp trustees may distribute income, on which they have paid tax, to employees. »Ê¹ÚÌåÓýapp payment is employment income assessable to tax on the employee. »Ê¹ÚÌåÓýapp employee cannot have credit for the tax paid by the trustees. This is in contrast to the tax rules that normally apply to trust distributions. »Ê¹ÚÌåÓýapp result is that tax is effectively charged twice. »Ê¹ÚÌåÓýappre is a charge on the trustees as trust income and on the employees as employment income.

»Ê¹ÚÌåÓýapp concession partially relieves this double charge. HMRC staff dealing with legacy cases can see the precise text at ESC A68.

»Ê¹ÚÌåÓýapp concession does not apply where the trustees are non-resident. ITA/S493 does not apply to them so they have no tax pool.