Topic

Question

  1. The Trustees of the Smith Discretionary Trust receive dividend income in 2019 totalling £30,000 and decide to make a distribution to John of £5,000.  How much tax do the trustees pay and what are the figures in the tax certificate R185 (trust income) that they give to John? 

The trustees Tax liability 

First £1,000 of Dividend income (at 7.5%) = £75.00 

Balance of Dividend Income (at 38.1%) (£29,000 x 38.1%) = £11,049.00

Total Tax payable by trustees £11,124.00

Tax Certificate for Discretionary Distribution 

Net Income Received £5,000

Tax Paid £4,090.91

Taxable Amount £9,090.91