Mandated Income

The CIOT has published on its website HMRC’s response to a query raised by them and the ICAEW as to what constitutes Mandated Income for the purpose of filing a trustees tax return.

Nigel Scase
Greene & Greene


Nigel, can’t access the reference. Where does the announcement appear on HMRC website?


Malcolm Finney

This is helpful but is there a possibility that examples 4 and 7 have confused HMRC?

“4.The investments are held by an investment manager in nominee accounts and the manager has a standing instruction to pay the income periodically, say quarterly, into the beneficiary’s bank account

7.The investments are held by an investment manager in nominee accounts and the manager is given ad hoc instructions to pay the income into the beneficiary’s bank account.”

I imagine that in these scenarios the income is paid into a general client account or a specific account for the trustees, operated by the investment manager, and income receipts will appear on statements for the trustees’ account with the fund manager before the sums are paid out to the beneficiary. The person providing answers at HMRC may not have realised this due to the reference to “nominee accounts”.

[for those who have not visited the link, examples 4 and 7 are among the circumstances that HMRC accept do not pass through the trustees’ hands.]

Am I being overly pessimistic?

Andrew Goodman
Osborne Clarke LLP

The HMRC response to CIOT and ICAEW is consistent with the reply I received when researching a recent article for the Trusts and Estates Law & Tax Journal.

The crucial statement by HMRC was: “If the trustee is neither entitled (beneficially) to the income nor receives it there is no basis for charging the trustee to income tax in respect of that income.”

There is, of course, a “curved ball” arising from the guidance published in the HMRC Trusts and Estates Newsletter of April 2017, and HMRC has confirmed that the “interim arrangement” will be strictly observed, so that it will only apply where the only income “received” by the trustee is savings income, and the tax liability on that income is less than £100.

Paul Saunders

Where an IIP beneficiary, who has income mandated to him and declares it on his own tax return (instead of the trustees declaring it) has paid some trust expenses personally, in particular costs that would be chargeable against income, may the beneficiary deduct the TME’s relating to income from the trust income that he is declaring on his tax return?

Sometimes an accountant’s fee invoice is sent to brokers for settlement with instruction that it be apportioned between capital and income in a certain fashion.

Presumably where income is mandated and paid out of the brokers’ nominees income account the benficiary must give permission for TME’s to be paid out of income?

Kevin Preston
Amherst & Shapland Limited