Income Tax Act 2007 section 24B

Calculation of net income at Step 2 for low income estates and trusts

Section 24B provides relief for estates and trusts with very small amounts of income, by treating their net income as zero where it falls below a de minimis threshold.

• Estates with net income of £500 or less at Step 2 of the income tax calculation have that income treated as £0
• Trusts with net income of £500 or less are similarly treated as having £0 net income, but the threshold may be reduced where the settlor has created multiple qualifying settlements
• Where a settlor has other qualifying settlements, the de minimis trusts amount is the higher of £100 and £500 divided by the total number of qualifying settlements plus one
• Qualifying settlements exclude trusts held for pensions purposes, trusts where the settlor retains an interest, trusts for disabled persons or relevant minors, and heritage maintenance settlements