The Lemon Fool

I am a trustee of a discretionary trust and a beneficiary. The trust holds 10 years worth of savings interest not withdrawn, smallish amounts, and was settlor interested, so no tax pool.

I have taken some money from the trust, as I am allowed to do. This amount is less than the accumalated interest.

I would like to know:
Is it a ‘gift’ to me?
If not, what is it?
How is it treated in my tax return? Do I pay tax on it? What forms should I complete?
[Interest in the trust has been taxed and paid by the settlor, up to date.]
Is there anything else I need to know?

Thanks.

fourtwentyfour wrote:I am a trustee of a discretionary trust and a beneficiary. The trust holds 10 years worth of savings interest not withdrawn, smallish amounts, and was settlor interested, so no tax pool.

I have taken some money from the trust, as I am allowed to do. This amount is less than the accumalated interest.

I would like to know:
Is it a ‘gift’ to me?
If not, what is it?
How is it treated in my tax return? Do I pay tax on it? What forms should I complete?
[Interest in the trust has been taxed and paid by the settlor, up to date.]
Is there anything else I need to know?

Thanks.

It is a "distribution" rather than a gift. It sounds like a distribution of capital ( the interest received by the trust loses its character as income when held inside the trust for long enough ) , in which case it is a nothing in your hands - no tax/ no return. If the amounts were significant, there could be an IHT exit charge on the trust.

As I understand it the gift is when the donor puts into a discretionary trust, not when beneficiary takes out. As above nothing to disclose.

Ok, that sounds like good news. I fill in the trust return showing the amount paid out, but for me I do not include it as my income, and it has no effect on my tax situation.

Thanks.