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Income Tax & Trusts - Coggle Diagram
Income Tax & Trusts
Bare Trust
asset
held in the name of nominee
but asset and income belong to beneficiary
taxed on beneficiary
must include trust income on tax return
if minors
income taxed at parent's income
if exceed £100
not if grandparents
great for school fees
Vulnerable beneficiaries
relevant minors
not yet 18
at least one parent died
Trust can be
Discretionary
Bare Trusst
IPP
disabled persons
attendance allowance
disability living allowance
personal independence payment
disabled pension
constant attendance
Armed Forces payment
IPP
Tax on Trustees
effectively paying tax on behalf of beneficiary
20% on savings income
No PSA
eg, savings income £1000
Trustees pay 20%
beneficiary receives £800
Bank/BS interest paid gross
tax on dividends 7.5%
no dividend allowance
not liable to higher rate tax
tax on life tenant - beneficiary
non taxpayer
can reclaim tax
basic rate
no further tax to pay
higher/additional rate
further liability
Discretionary Trust & AM Trust
trustees have discretion
over distribution of income and capital
Trustees tax
£1,000 divided by no of trust
min of £200 per trust
7.5% / 20%
standard rate
thereafter 45% / 38.1%!!!
no PSA or DA
Tax on Beneficiary
trust income
45% tax deem to been paid
non taxpayer
can reclaim
basic rate
reclaim of 25%
additional rate
5% reclaim