TSEM8365 - Trust management expenses: IIP trusts: IIP beneficiaries: tax law: order of set-off: example
An IIP trust receives income in 2010-11: rental income £1,000 and bank interest £800 (basic rate tax of £200 has been deducted at source). Trustee pays TMEs properly chargeable to income of £250.
The trustee receives credit for the tax deducted at source from the bank interest (£200) so has to pay £200 tax on the rent. TMEs do not affect the trustee's position.
|Net income (as above)||£800||£800|
|Minus TMEs (set first against savings income)||(£250)|
|grossed up||(@ 20%)||£1,000||(@20%)||£687.50|