ANNEX 1:: MINOR CHANGES IN THE LAW MADE BY THE BILL This change is in taxpayers’ favour in principle and may benefit some in practice. But the numbers affected and the amounts involved are likely to be small.
Change 86: Settlements: taxation of amounts taxable under the accrued income scheme: section 482 and Schedule 1 (section 720 of ICTA)
This change ensures that income arising to trustees under sections 628(5) and 630(2) (accrued income profits) is treated in the same way as all other receipts that are taxed at the trust rate.
Section 686A of ICTA, as substituted by FA 2006, brought together those receipts by trustees that are taxable at one of the special trust rates whether or not the trustees would otherwise have accumulation or discretionary income. But it did not include amounts taxable on trustees at the trust rate by virtue of section 720(5) of ICTA. In the interests of simplification, these amounts are included in the re-write of section 686A. See Type 2 in section 482.
The inclusion of these amounts in the list in section 482 means that the exemptions for charitable trusts and specified pension funds apply and that trustees’ expenses may be set against the deemed income.