Distribution from Discretionary Trust

Income or Capital

Didn't find your answer?

Only asset of Trust is an investment bond on which 5% withdrawals are taken.  Are payments to beneficiaires income or capital?  The payments are regular and have the 'quality' of income in the beneficaires hands.  Still cannot decide if they are income distributions or capital though?

Replies (3)

Please login or register to join the discussion.

By richard thomas
21st Jul 2022 12:51

That’s a legal question, not a tax one.

Thanks (0)
By CJaneH
21st Jul 2022 14:36

The tax treatment is the sums are capital until 100% repaid and then certificate are issued as chargeable events. But how that related to payment through a trust I have no idea. could the people who issued the bond advise?

Thanks (0)
Replying to CJaneH:
By Tax Dragon
21st Jul 2022 14:45

The question is about the distributions - payments the trustees make, not receive.

HMRC has been known to argue that capital is income. Here's an article from one of Justin's favourite sources: https://www.taxinsider.co.uk/discretionary-trust-distributions-capital-o...

Thanks (1)