Recovering Tax on the Halcrow Trust Payouts

Minimising Tax on Distributions from the Halcrow Trust

The application of the PAYE tax tables has in many cases resulted in tax at 40% or 50% being deducted from distributions received from the Halcrow Trust. In many cases the rate of tax deducted will be excessive and members should ensure that their tax returns for 2013 are completed promptly after the 5th April 2013 to reclaim the tax overpaid. In order to become eligible for a payment under the Halcrow Trust Distribution Plan 2012 members were required to sign an Option Exercise Form.

Clause 4 of this Form bound recipients to agree to pay the Employer's National Insurance Contributions (NIC) on distributions from the Trust. Although members are not liable for the employer's NIC, the Form signed makes it a condition of receiving a payment from the Trust and no refund of the NIC is possible. The cost of the Employer's NIC is therefore a cost which is wholly, necessarily and exclusively incurred in generating the income distribution from the Halcrow Trust and may be claimed as a deduction for tax.

Although the tax returns have not yet been issued, distributions from the Halcrow Trust may be shown on the Additional Information pages that will come with the tax returns for 2012-13. Box 3 may include the amount of the gross distribution less the amount of the employer's NIC while the whole of the tax deducted from the payment should be included in Box 6. In the Additional Information Box on page 4, the gross distribution from The Halcrow Trust should be shown less the amount of the employer's NIC deducted in arriving at the taxable income shown in Box 3. Recipients may therefore secure a reduction of tax by claiming the amount of the employer's NIC as a deduction from the distributions from The Halcrow Trust.