Income tax efficiency

[jansmith]

Is it better for an A&M trust to pay out income to the extent allowed by the tax pool to a non tax payer beneficiary (to reclaim the tax) or to leave it,taxed, within the Trust?

[Lawrence McAulay 01]

Where you have beneficiaries with unused personal allowances, you should (from a tax point of view) use up those allowances by distributing income. This way, you can get back some of the tax paid by the trust.

I am only considering tax here. I cannot tell you whether it is a good idea generally for a beneficiary to be paid an income, or vouch for what he will do with it when he gets it!

[jansmith]

Many thanks for such a prompt answer.