TSEM3764 - Trust income and gains: beneficiaries: beneficiary entitled to trust income - grossing up
If the trustees receive income that is taxed at source, or if they pay tax on it under self assessment, the beneficiary will receive a net amount. But he or she is entitled to the gross amount. Consequently he or she is taxable on the gross amount.
For example, the trustees have gross bank interest of 拢1,000 on which tax is deducted at source 拢200.They pay 拢800 to the beneficiary. The beneficiary is entitled to the gross amount 拢1,000, and is taxable on that amount.