TUnder ESC/B18, income underlying a discretionary payment is
treated as arising from the sources of income received by the
trustees in the tax year that the payment is made. Income is
considered as arising rateably from the sources of income. By
rateably we mean the beneficiary’s payment contains the same
proportion of each strand of income as the total received by the
If there is not enough income arising in the year the payment is made to fund all of the payments made by the trustees (that is, if the trustees are drawing on accumulations – that is, income received by trustees in excess of payments out of trust income - made in previous years) we need to apply the proportions of trustees’ income from the year(s) in which the accumulations were made. This is known as ‘spreading back’ (see INTM367910).