This consultation seeks views on proposals to formalise and extend a concession that removes trusts and estates from income tax where the only source of income is savings interest and the tax liability is below £100.

Under the proposals, low-income trusts and estates with income from any source up to a ‘de minimis’ amount will not be subject to income tax on that income.

The precise level of the de minimis amount is to be decided. As the existing HMRC arrangement applies where tax does not exceed £100, the draft clauses use an illustrative amount of £500. This equates to £100 of tax relief at a 20% tax rate.

For trusts and estates with income more than the de minimis amount, income tax will be due on the full amount of income rather than only applying to the income above the de minimis amount.