I have a query regarding the tax pool where a will trust receives dividend income from an estate…
I understand that where dividend income is received by an estate prior to 6 April 2016 (when it came with a 10% tax credit attached) but is not paid over to the will trustees until after that date there are transitional rules which mean that it will be paid over to the will trustees with a non-repayable 7.5% tax credit attached to it.
If a trust receives dividend income from an estate it will come with a 7.5% tax credit attached and the will trustees will get credit for this 7.5% tax. The 7.5% tax will represent either tax actually paid by the PRs on dividend income received by them after 6 April 2016 or a notional non-repayable tax credit as a result of the transitional rules having been applied to dividend income received by the PRs before 6 April 2016.
I understand that where a trust receives income from an estate the normal tax rules apply i.e., income charged at 45% and 38.1% goes into the tax pool as well as income charged at 20% and 7.5% that is covered by the SRB.
My question is this…should there be a restriction made to the tax pool in respect of the proportion of the 7.5% tax credit that represents the notional non-repayable 7.5% tax credit on dividend income received by the estate prior to 6 April 2016 but paid to the will trustees after that date?”