Trust management expenses chargeable to income are allocated
first to UK dividends, then to foreign dividends and after that
rateably to income taxed at the rate applicable to trusts.
When deducting trust management expenses, the expenses should be ‘grossed up’ at the rate of tax applying to the income against which they are set (before any additional tax is taken at the rate applicable to trusts or at the dividend trust rate). Thus if deducting trust management expenses from dividends paid there is no need to gross up (dividends paid is effectively a net figure for this purpose) but if deducting from gross interest the expenses will need to be ‘grossed up’ at the savings rate (20%).