Taxes Consolidation Act 1997 section 805

Surcharge on certain income of trustees

Section 805 imposes a 20% surcharge on the undistributed income of certain discretionary trusts, where that income is not distributed within the year of assessment in which it arises or within 18 months after the end of that year.

• A 20% surcharge applies to trust income that is accumulated or payable at the trustees' discretion and is not distributed within the year of assessment or within 18 months after the end of that year.
• The surcharge does not apply to income of charitable trusts, pension fund trusts, income treated as belonging to a beneficiary or settlor, or income applied in meeting the trustees' administration expenses.
• The surcharge is charged for the year of assessment in which the 18-month period ends and forms part of the trustees' income tax liability for that year; the recipient of a distribution from surcharged income cannot claim a credit for any part of the surcharge.
• Revenue may require trustees to include in their returns details of how trust income has been applied, including how any discretion was exercised and in whose favour.