Meg Saksida considers the purpose and application of form R185.
If a trust beneficiary receives a Form R185 from a trustee, it is good news. It means they have been paid some income during the tax year.
The R185 shows the net income a beneficiary received from the trust, and the associated tax paid on their behalf by the trustee. The taxation system for trustees and beneficiaries in the UK is designed such that the beneficiary cannot fail to pay at least basic rate tax on the income received from the trust. The system differs slightly if the trust is an interest in possession (IIP) to that of a discretionary trust (DT).
Interest in possession trust
There are two beneficiary parties in an IIP trust. The ‘remainderman’ beneficially owns the trust capital and is entitled to it at some time in the future - after the life tenant is no longer entitled
