Settlor Interested Trust

How is income from settlor interested trust taxed

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A discretionary trust established by Mr K in 1987 has amongst its beneficiaries his wife Mrs K.

The trust's assets are three rental properties so the only income, save for a very modest amount of bank interest are rental profits.  For the year ended 5 April 2016 the total trust income amounts to around £19,000.

A discretionary payment of income to Mrs K has been made during the year for £6,200.

The trust deed specifically precludes any settlor benefit "..... none of the powers .....  or discretions ..... conferred on the trustees ..... shall ..... in any circumstances whatsoever be exerciseable in any manner which may benefit the settlor and no part of the income or capital of the trust ..... shall at any time ..... be ..... applied for the benefit of the settlor"

Does the fact that Mrs K is a beneficiary mean that Mr K will despite the above clause be taxable on the remainder of the trust income as settlor.

Thank you for any assistance you may be able to provide.



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By stephenpotter
11th Oct 2016 13:08

Please ignore the above. I had myself confused and now fully understand the position!

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