TSEM1565 | Introduction to trusts: types of trust: accumulation/discretionary trust

Use of term ‘accumulation/discretionary trust’

We use the term ‘accumulation/discretionary trust’ to describe any trust where the trustees can accumulate income or pay it at their discretion. This includes

• trusts to accumulate (TSEM1566)

• trusts where the trustees can pay income at discretion

• accumulation and maintenance trusts (TSEM1567)

• some mixed trusts (TSEM1569)

Tax consequences

Where the trustees have power to

• accumulate income or

• pay income at discretion or

• accumulate income and pay income at discretion

the trust’s income is chargeable at special rates of tax under ITA/S479. See TSEM3010+.

From April 2023 the special trust rates are:-

• 39.35% on dividend type income

• 45% on all other income

For earlier years see TSEM3041.