TSEM5620 - Trusts for particular purposes: compensation under ESC A68 - example using dividend income - years to 2009-2010

The trustees must meet the conditions of the concession (TSEM5610).

This is how to calculate relief on dividend income.

Income and tax rates Amount Total

Tax pool brought forward

-

Nil

Dividend received

£90,000

-

Tax credit

£10,000

-

Gross income

£100,000

-

Tax due on standard rate band (10%)

£100

£100

Tax due at (dividend trust rate) (32.5%)

£32,175

£32,175

Less non-payable tax credit

-

£10,000

Income available for distribution

£67,725

-

Total tax pool

-

£22,275

Amount distributed subject to PAYE

£67,725

-

 

The compensation payable to trustees is the lesser of

Tax due Amount Total
  • tax at trust rate on the total payments which are treated as employment income

£67,725 @ 40% =

£27,090

  • tax which the trustees have available in the ‘tax pool’ above

-

£22,275

The compensation payable is therefore

-

£22,275