I have an R185 showing discretionary trust income received in the form of interest already taxed at 20% and divs already taxed at 10%. This income source commenced in 2004/05. My client is only liable at 22%, so I assumed no more tax is due (as would be the case if he had received this income direct). However I can find no confirmation of this on the Revenue website - can anybody help?
Also, client is not in receipt of SA tax returns - but do I need to advise the Revenue of this trust income anyway?
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Silly me
Thanks for that Michael, I have re-submitted. The solicitor told my client this is a discretionary trust - could he have got it wrong?
Discretionary?
Hi Judith,
If the payments that your client received were really from a Discretionary Trust, then I would expect the R185 to show a tax credit of 40% for 2004/2005 (34% for earlier years).
However, if as you say the credits are 20% (for interest) and 10% (for dividends) then this would suggest that the payments are actually from an Interest in Possession Trust. If this is the case then you are correct in your assumption that no more tax is due (unless your client is chargeable at higher rates).
A good link for you to try would be to HMRC's publication Trusts - An Introduction, under the section "How trusts are taxed".
You would only need to notify the Revenue of chargeabilty and complete a Tax Return if the receipt of the Trust income (or any other non PAYE income for that matter) results in a tax liability for the year (because, for example, that income becomes chargeable at higher rates).
P.S. If you would like more people to read and possibly respond to your question I would suggest that you re-submit it under the category "Direct Tax". The "IT" category you ticked stands for Information Technology, I believe, and not Income Tax.
Hope this helps.