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Advice is required on how ITTOIA 2005, s 629 taxes the trust income on the settlor of a parental discretionary trust and how payments to the children are matched against the “available trust income”
My query concerns a parental discretionary trust and how ITTOIA 2005 s 629 operates to tax the trust income on the settlor. In essence I understand that the income is taxed in the hands of the settlor only when it is distributed to the children by the trustees.
It is therefore necessary to keep track of income accumulated throughout the history of the trust. ITTOIA 2005 s 619(2) directs that the income retains its character in the hands of the settlor – presumably the relevant figures are reported on a form R185(Settlor).
I would welcome advice on how income (or indeed capital) payments to the children are matched against the “available trust income”? More specifically are earlier years matched first? What is the position if there are several types of income?
The trust has been in receipt of non-savings savings and dividend income –...
