Tax on Discretionary Trust Distributions

[peter@2711.co.uk]

"Out of the Blue", a Standard Rate Taxpayer has been advised by Solicitors that he will be receiving a £40,000 Distribution from a Discretionary Trust, apparently created in 2001.
Does this need to go on his Tax Returm? Is it Taxable? Do Solicitors normally pay DT Distributions Gross or Net?
If it is taxable, then can he request that half is paid in this Tax Year and half next, to avoid paying the 40% Higher Rate Tax? But would this be permissible if all other Beneficiaries received their full Distributioon in this Tax Year?
Many thanks
JazzPete.

[section 44]

Standard Rate Taxpayer

Is that a basic (20%), higher (40%) or additional (50%) rate taxpayer?

Does this need to go on his Tax Returm?

Yes.

Do Solicitors normally pay DT Distributions Gross or Net?

The trustee(s) will have paid tax on the profits of the trust fund and the distribution will attract credit for this tax but otherwise it is paid gross.

As it is a discretionary trust, it is up to the trustee(s) what distributions to make, and when.

[tax_schmax]

To add to the above.

Is the distribution income or capital?

[peter@2711.co.uk]

Thanks, tax_schmax

Currently the Beneficiary pays tax at 20%.

The Distribution will be capital.

I do not think the Trust has made any "profits" - it is now worth less than when created - Income has been swallowed by Trustee Costs and Professional Fees.
JazzPete

[tax_schmax]

Receiving capital does not carry an income tax liability. There are some "wrinkles" around this point, but if this is a one off ad hoc payment, your friend should be fine. It does not need to go on the tax return. Be very sure it's capital and not income