TSEM3474 - Trust income and gains: vulnerable beneficiaries: claims to special tax treatment: computing the amount of relief: income tax - basic example
A trust has arisen in England as a result of an intestacy. There is one current beneficiary, a UK resident minor who is a vulnerable person. Because of the right to accumulate the trustees are liable at the special trust rates. A valid vulnerable beneficiary election is in force. The trustees receive the following income in 2019-20:
| Income | Amount |
|---|---|
Rent |
拢20,000 |
Bank interest |
拢5,000 |
UK dividends |
拢10,000 |
TQTI (the trustees바카라 사이트� tax liability before making a claim for special tax treatment) is:
Tax Rates |
Non-savings |
Savings |
Dividend |
Total |
|---|---|---|---|---|
Income |
拢20,000 |
拢5,000 |
拢10,000 |
- |
Tax聽at standard rate 20% |
拢1,000 |
- |
- |
- |
Tax at Trust rate 45% |
拢19,000 | 拢5,000 | - |
- |
| Tax at Trust dividend rate 38.1% | - | - | 拢10,000 | - |
Tax chargeable |
拢8,750.00 |
拢2,250.00 |
拢3,810.00 |
拢14,810.00 |
The vulnerable person has no personal income or gains in the year and so the amount of TLV2 is nil.
TLV1 (the amount of additional tax that the vulnerable person would pay if the qualifying trusts income arose directly to him or her) is:
Income |
Non-savings |
Savings |
Dividend |
Total |
|---|---|---|---|---|
Income - actual |
- |
- |
- |
- |
Income treated as arising to the vulnerable person |
拢20,000 |
拢5,000 |
拢10,000 |
- |
- |
拢20,000 |
拢5,000 |
拢10,000 |
- |
Less personal allowance |
拢12,500 |
- |
- |
- |
Savings chargeable after 拢1,000 allowance (20%) |
- |
拢4,000 |
- |
- |
Tax chargeable |
- |
拢800.00 |
- |
拢800.00 |
Chargeable at dividend rate after 拢2,000 dividend allowance (7.5%) |
- |
- |
拢8,000 |
- |
Tax chargeable |
- |
- |
拢600.00 |
拢600.00 |
Chargeable at lower rate (20%) |
拢7,500 |
- |
- |
- |
Tax chargeable |
拢1,500.00 |
- |
- |
拢1,500.00 |
TLV1 |
- |
- |
- |
拢2,900.00 |
Less TLV2 |
- |
- |
- |
拢0.00 |
VQTI |
- |
- |
- |
拢2,900.00 |
The reduction that the trustees can claim is TQTI - VQTI (拢14,810 - 拢2,900) = 拢11,910. Their final liability is therefore:
| Tax Due | Total |
|---|---|
Tax due |
拢14,810.00 |
Less reduction for special tax treatment |
拢11,910.00 |
- |
拢2,900.00 |
The trustees must also ensure that they have paid enough income tax to cover the deemed deduction of tax on the distribution to the beneficiary (see TSEM3490).