Income Tax (Trading and Other Income) Act 2005 section 274C

Reduction for accumulated or discretionary trust income: calculation

Section 274C explains how to calculate the basic rate tax reduction available to trustees of a settlement in respect of property business income that is accumulated or discretionary trust income.

• The tax reduction for each relievable amount is calculated as L multiplied by the basic rate of income tax for the year.
• L is the lower of the relievable amount and the adjusted profits of the property business (after deducting any losses brought forward), or, if less, the trustees' share of those adjusted profits that is both taxable on them and classified as accumulated or discretionary income.
• If the relievable amount exceeds L, the excess is carried forward to the next tax year as the brought-forward amount for that property business.
• Where trustees have more than one relievable amount (for example, from different property businesses), the calculation applies separately to each one.