Question:
I am a trustee of a bare trust personal injury compensation account. The trust will be buying two properties to rent. I believe the two options to be either claim all relevant allowances and total them up and deduct from rental income, or add total rental income and deduct a single allowance against tax of £5,000?
Arthur Weller replies:
I do not understand your second alternative. Bare trust income is calculated in the same way as for an individual. So you should calculate all relevant allowable expenses, total them up, and deduct them from rental income. If it is truly a bare trust, then the beneficiary's income tax personal allowance will be available when calculating the tax on income.
