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Investment income

Produced by a Tolley Trusts and Inheritance Tax expert
Trusts and Inheritance Tax
Guidance

Investment income

Produced by a Tolley Trusts and Inheritance Tax expert
Trusts and Inheritance Tax
Guidance
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Introduction

This guidance note highlights some features of the taxation of investment income which apply specifically to trusts.

Interest

For commentary on what constitutes interest and how it is taxed, see the Interest received net or gross guidance note.

Up until 5 April 2016, interest received by trustees was subject to the same arrangements for deduction of basic rate tax at source, as that received by individuals. Trusts subject to standard rates of tax had no further liability beyond the 20% deducted at source. After that date, interest is to be paid without deduction of tax.

Trustees are not entitled to the savings allowance introduced by FA 2016, which provides for individuals to receive up to £1,000 of gross interest charged at a nil rate. Consequently, following the abolition of tax deduction at source, trustees became liable to file a tax return to pay a tax liability on very small amounts of interest received. In recognition of the additional administrative burden on trustees, and indeed on their own resources, HMRC introduced a concession under which

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