Flexible Trusts & Income Tax

LeBosh

I have just become a trustee of a flexible trust where the beneficiaries are my three young children

Does anyone know how these are treated re income tax, I have looked at the IR Web Site and although there are sections on trusts there is nothing specific about Flexible Trusts.

What I would really like to know is if we simply invest this money in a Savings Account can we offset any income tax against the tax allowance of the children

Any help greatly appreciated.

dzug1

I think the problem may be your word for it - flexible trust is a generic description, not a type of trust.

Any idea what its proper description is? Discretionary sound most likely

http://www.hmrc.gov.uk/trusts/income-tax/income-types.htm

Seems to imply that the trust pays tax (at up to 40%) and the kids claim it back.

LeBosh

Looking at the trust paperwork it certianly seems to fit into the description given of a disretionary trust.

Having looked at the Web Site provided it looks like we have to pay tax at 40% on trust income but the kids can only claim this back if we actully pay this to them as income rather than accumulate it within the trust.

I was hoping that there would be a way of reclaiming the tax and accumulating within the trust at the same time.

Looks like I am going to be faced with a trust tax return and three forms to reclaim the tax every year.