TSEM3788 - Trust income and gains: beneficiaries: payment of personal expenses from income

Trustees may pay expenses that are the personal liability of a beneficiary. For example, a beneficiary may occupy a property belonging to the trust. The trustees could pay items that are the occupier바카라 사이트™s responsibility, such as gas, electricity and telephone bills, rates or Council Tax (including business rates if appropriate).

Any income used to pay such expenses is a distribution in kind to the beneficiary in question, and is treated as such. The payment:

  • confers an income benefit on the beneficiary and
  • creates a charge on the trustees, of such a gross sum as after deduction of tax at the basic rate leaves a net amount equal to the expenses paid.

The trustees should give the beneficiary a form R185 (Trust Income). The income benefit conferred on the beneficiary is an annual payment. The grossed up expenses can give rise to liability on the trustees under ITA/S901.

The beneficiary바카라 사이트™s occupation of trust property is an income benefit, equivalent to an entitlement to income, so the non-discretionary basis applies.

Tax cases

Tollemache (Lord) v CIR (11 TC 277), Sutton v CIR (14 TC 662), Miller (Lady) v CIR (15 TC 25)