Discretionary income payments to beneficiaries

When trustees make a discretionary payment of income it carries a tax credit at the trust rate (currently 50 per cent). This means it is treated in the hands of the beneficiary as if Income Tax has been already paid at 50 per cent. The beneficiary might be able to claim some or all of the tax back if they're a non-taxpayer or a 20 or 40 per cent taxpayer.

Trustees of a discretionary trust - or an accumulation trust where they also have the power to...

What is a bare trust?

A bare trust is one where the beneficiary has an immediate and absolute right to both the capital and income held in the trust. Bare trusts are sometimes known as 'simple trusts.'

Someone who sets up a bare trust can be certain that the assets (such as money, land or buildings) they set aside will go directly to the beneficiaries they intend. These assets are known as 'trust property'. Once the trust has been set up, the beneficiaries can’t be changed.

The assets are held...