Form SA107 is the supplementary schedule to the UK Self Assessment return used by beneficiaries to declare income received from UK and offshore trusts, settlements, and deceased estates under Part 9 of the Income Tax Act 2007 (ITA 2007).
Trust income carries complex tax credits depending on the legal nature of the trust and the rate at which trustees paid tax on the underlying income.
Types of Trust Income Reported on Form SA107
Page T 1 of Form SA107 categorises distributions according to the structure of the trust:
1. Discretionary Trusts (Boxes 1–5)
In a discretionary trust, trustees have absolute discretion over when and how much income or capital to distribute to beneficiaries:
- Trustees pay tax at the highest rates: 45% on non-dividend income and 39.35% on dividend income (above the standard £500 trust rate band).
- When a distribution is paid to a beneficiary, it is treated as a single net payment carrying a notional 45% tax credit funded by the trustees' statutory "tax pool".
- Beneficiaries declare the grossed-up figure in Box 3 of SA107. If your marginal income tax rate is 0%, 20% (basic rate), or 40% (higher rate), completing SA107 allows you to reclaim the difference between your marginal rate and the 45% already paid.
2. Interest in Possession (IIP) Trusts (Boxes 7–12)
In an interest in possession trust (life interest trust), the beneficiary has an immediate, automatic right to the income of the trust as it arises:
- The income retains its original character (dividend, savings, or property income).
- Trustees pay tax at basic rates (20% for interest/rental income, 8.75% for dividend income).
- Beneficiaries declare the income under the appropriate category on SA107 and pay any higher-rate or additional-rate top-up tax due, using the tax paid by trustees as a credit.
Income from Estates of Deceased Persons
Page T 2 of Form SA107 reports income received from the estate of someone who has died during the administration period (the period between death and completion of probate):
- Personal representatives pay basic rate tax (20% non-dividend, 8.75% dividend) on estate income as it arises.
- Beneficiaries with an interest in the residue of the estate receive distributions with basic rate tax deemed paid, certified on Form R185 (Estate).
- If you are a higher rate (40%) or additional rate (45%) taxpayer, you pay the difference through Form SA107.