Locating income

I am dealing with a discretionary trust set up following a successful medical negligence claim the recipient being profoundly disabled. HMRC have confirmed that the provisions of IHTA 1984 s 89 (settlor-interested trust) are satisfied but what are the income tax implications?
Despite being a discretionary trust I am advised that the higher trust rate will not apply as all the income will be assessable on the beneficiary but how does this work in practice particularly as regards untaxed interest or foreign dividends paid gross or carrying a higher than 10% tax credit? HMRC's own manual at TSEM4575 advises that all UK income should go on the trust pages — so I assume untaxed trust income having been income in the trustees' hands which will be declared in the trust return and tax paid on would go there — but...