Tax on Discetionary Trust

revs

Hi,

I'm trying to help my wife with her tax position on her discretionary Trust but I'm struggling to understand despite a background in accountancy.

The Trust was set up in 2017 with an amount of £100k.  My wife is a trustee and the sole beneficiary.  The £100k is invested in a balanced onshore bond (equivalent to a 60/40 portfolio).

As 5% per year is withdrawable out of the trust, she has withdrawn £4k per year for the previous 5 years, and placed that into a stocks and shares LISA.

She registered her trust with HMRC and they are asking for a tax return for the previous financial year.  My question is how to calculate the tax and when it's payable?

If tax is due on the trust, would it make sense to reduce the risk/return within the trust and use the LISA for the risk/equity play to reduce the tax liability?

We'd appreciate any help with this.

Many Thanks

xylophone

You have seen this?

https://www.gov.uk/trusts-taxes/beneficiaries-paying-and-reclaiming-tax-on-trusts#:~:text=If a settlor-interested trust,credit cannot be claimed back.