Discretionary trusts are guided by Income tax rules. This document discusses how to calculate the income tax liability on the income of discretionary trusts and any trusts where income may be accumulated. It also covers rates of tax, income belonging to other persons, income used to pay trustees’ management expenses, and the standard rate band.

Points discussed within this guidance note:

> Introduction to Discretionary Trusts

This note sets how to calculate the income tax on trusts, what tax is payable on trust income. In order to calculate the income tax liability for any trust, you first have to determine what type of trust  it  is before you can determine whether it falls into the standard rate tax or trust rate tax.

> The calculation of taxable income

This note sets out how to calculate what income tax is payable and by who and how to identify income arising for trustees of a discretionary trust. Additionally, it sets out what deductions may be available.

> Deductions from taxable income

> Rates of tax

> Income belonging to other persons

> Income used to pay trustees’ management expenses (TMEs)

> The standard rate band

> The calculation of income tax

To view the full guidance note register for a free trial or if you already have access to TolleyGuidance please use the 'login' button below:

Request a Free Trial to TolleyGuidance to gain access to the full article

TolleyGuidance is produced by specialists within the field, our tax guidance materials provide actionable insights and practical guidance to support you day-to-day. We don’t just inform you about the latest changes in the tax world. We take the time to explain the implications and, most importantly, what actions you need to take for your clients.

A bit about you:

Please note that all fields marked with a * must be filled in
First name*
Last name*
Job title*