I have a client with a first and final distribution from a discretionary trust.
The trust contained a property which was rented for a number of years and now has been sold.
Trust returns have been completed by another firm, and show a tax pool of (say) £20k on the rental income.
There is a capital gain of another £30k which does not (and I think correctly) appear in the tax pool.
£175k sent to 3 beneficiaries who are all non-tax payers.
Am I right that:
1. The R185 only shows the income element of the payment to the beneficiaries, not the capital distributed? ie the CGT is not recoverable, or shown anywhere.
2. Ordinarily, you simply gross up the payment to the beneficiary by 45% to give the deemed tax paid. I am aware this can lead to extra tax within the trust if the pool goes negative. But as the trust has been closed, do you just ensure the tax credit = the tax pool per beneficiary? So in practice fix the net payment line, so in this case I get 1/3 of the pool as the tax credit, and gross up the net payment accordingly?
Very much regretting agreeing to produce the 'simple' R185's for my long standing client. The old trust accountant has retired.