SolvedTSEM8365 | Trust management expenses: IIP trusts: IIP beneficiaries: tax law: order of set-off: example
From HM Revenue & Customs · Trusts, Settlements and Estates Manual
An IIP trust receives income in 2019-20: rental income £5,000 and bank interest £1,000 .Trustee pays TMEs properly chargeable to income of £250.
Trustee’s position
| - | Rent | Interest |
|---|---|---|
| Gross income | £5,000 | £1,000 |
| Tax due | £1,000 | £200 |
| Net income | £4,000 | £800 |
The trustee has to pay £1,000 tax on the rent and £200 on the bank interest. TMEs do not affect the trustee’s position.
Beneficiary’s position
| - | - | Rent | - | Interest |
|---|---|---|---|---|
| Net income (as above) | - | £4,000 | - | £800 |
| Minus TMEs (set first against savings income) | - | - | - | (£250) |
| - | - | - | - | £550 |
| grossed up | (@ 20%) | £5,000 | (@20%) | £687.50 |