Discretionary Trust Tax Calculator
Trust Tax Calculation
Trust Value-
Available NRB-
Chargeable Amount-
Effective Rate-
Tax Due-
Discretionary Trust Tax Rates 2025/26
| Charge Type | Rate | When Applied |
|---|---|---|
| Entry Charge (lifetime) | 20% on excess over NRB | On creation/addition |
| 10-Year Periodic | Up to 6% of trust value | Every 10th anniversary |
| Exit Charge | Proportionate to periodic | On distributions |
| Death within 7 years | Up to 40% on CLT | Extra tax on entry charge |
The NRB for 2025/26 is £325,000. Previous chargeable lifetime transfers in the 7 years before the trust was created reduce the available NRB.
Key Trust Tax Facts
NRB 2025/26
£325,000
Entry Rate
20%
Max Periodic
6%
Death Rate
40%
Trust Income
45%
Trust CGT
20%/28%
How to Use This Calculator
1
Select the charge type
Choose between entry charge (creation), 10-year periodic charge, or exit charge.
2
Enter the trust fund value
The current value of assets in the trust.
3
Input available NRB
The nil rate band is 325,000 pounds, reduced by any previous CLTs within 7 years.
4
Add quarterly periods
For exit charges, the number of complete quarters since the last periodic or entry charge.
5
Review the tax calculation
See the effective rate and tax due for your specific scenario.
Frequently Asked Questions
What is a discretionary trust?
A discretionary trust gives trustees the power to decide how to distribute income and capital among a class of beneficiaries. Unlike fixed-interest trusts, no beneficiary has an automatic right to income or capital. This flexibility makes them useful for estate planning but they are subject to the most complex IHT regime.
How is the entry charge calculated?
When assets are transferred into a discretionary trust during the settlors lifetime, an entry charge of 20% applies to the value exceeding the available nil rate band (325,000 less any CLTs in the previous 7 years). If the settlor pays the tax, the rate is effectively 25% on the net transfer. No entry charge applies if the total is within the NRB.
What is the 10-year periodic charge?
Every 10th anniversary of the trust, a periodic charge of up to 6% of the trust value (over the available NRB) is levied. The maximum effective rate is 6% (which is 30% of the lifetime rate of 20%). The actual rate depends on the trust value, NRB available, and any additions to the trust between creation and the 10-year date.
How does the exit charge work?
When capital leaves a discretionary trust (distributed to beneficiaries), an exit charge applies. This is proportionate to the last periodic charge, calculated based on the number of complete quarters since the last periodic charge (or entry). The maximum is 6% for a full 10-year period, so distributions shortly after a periodic charge attract minimal tax.
Do discretionary trusts pay income tax?
Yes. Discretionary trusts pay income tax at the trust rate: 45% on non-dividend income and 39.35% on dividend income (2025/26). Beneficiaries receiving distributions get a 45% tax credit. Basic rate taxpayers can reclaim the excess tax. The first 1,000 pounds of income (divided by the number of trusts) is taxed at basic rate.
Official Sources & References
Data verified against official UK government sources. Last checked April 2026.