TSEM8720 - Trust management expenses: allowable expenses: specific items: bank charges

Whether charges on a bank account or overdraft are payable out of income or capital depends on what those charges secure. If they secure a facility that is for the better administration of the trust fund as a whole, such charges should be treated as an expense of capital. So for example charges on a current account, whether or not it incidentally bears interest, or to keep open an overdraft facility that may or may not be taken up, are capital and the charges are not TMEs properly chargeable to income. They are therefore not allowable TMEs.

Whether interest on a bank loan or overdraft is allowable depends on the actual use of the funds advanced by the bank to the trustees - see TSEM8730.