Discretionary Trust: Income tax on dividends 2004/05		Tax on Dividend			Capital distribution by trustees (no further income tax)	Tax on income distribution by trustees				ICTA s.	Notes
		Dividend to individual		Dividend to trustees of discretionary trust		Tax on trustees making distribution	And tax on individual beneficiary
		basic rate taxpayer	higher rate taxpayer				non taxpayer	basic rate taxpayer	higher rate taxpayer
Dividend	Actual dividend (say)	£900	£900	£900
	Tax credit on dividend	£100	£100	£100						231	Tax Credit is one ninth of actual dividend
	Gross (deemed) Sch. F Income	£1000	£1000	£1000						20(1)
Trustee distribution	Actual distribution				£675	£540	£540	£540	£540		Max. if trustees rely on dividend to fund distribution and tax: formerly 594
	Tax notionally deducted on distribution					£360	£360	£360	£360	687
	Gross (deemed) distribution					£900	£900	£900	£900	687
Tax rate on dividend	Sch F ordinary rate	10%								1B(2)
	Sch F upper rate		32.5%							1B(2)
	Sch F Trust rate			32.5%						686(1A)	formerly 25%
Tax rate on distribution	Rate of tax paid by trustees on distribution					40%				687	rate applicable to trusts formerly 34% now 40%
	Basic rate paid by beneficiary							22%		1A(2)	Lower rate does not apply
	Higher rate paid by beneficiary								40%
Tax	Tax on individual/trustees/beneficiary	£100	£325	£325		£360	£0	£198	£360
	Credit for tax credit on dividend	-£100	-£100	-£100							Tax credit not repaid to non tax payer
	"Credit for tax paid by trustees (""tax pool"")"					-£225					Tax credit not set off against trustees liability under s. 686
	Credit for tax notionally deducted on distribution						£360	£360	£360
	Tax due (or refunded)	£0	£225	£225	£0	£135	-£360	-£162	£0	687
	Actual sum received after tax	£900	£675	£675			£900	£702	£540
	Rate of tax as % of actual dividend	0.00%	25.00%	25.00%	25.00%		0.00%	22.00%	40.00%
	Rate of tax before 2004/5	same	same	16.65%	16.65%