Form R185 (Trust Income) is the statement trustees give a beneficiary showing the trust income paid to them or due to them for a tax year, and the tax already paid on it. The beneficiary copies the figures onto the SA107 Trusts pages of their tax return, or onto form R40 if they do not file a return, to pay any extra tax or reclaim tax that was overpaid. Discretionary payments carry a 45% tax credit that many beneficiaries can partly or fully reclaim.

What is form R185 and who gets one?

Trustees must give a beneficiary a statement of the income and tax paid by the trust if the beneficiary asks, and form R185 (Trust Income) is the standard way to do it. Where there are several beneficiaries, each gets the figures for their own share. HMRC publishes a new version each year; the current form is dated August 2026 and covers 2025 to 2026.

There are several related forms, and using the wrong one is a common error:

  • R185 (Settlor) for income taxed on a settlor who keeps an interest, and for payments to a settlor’s minor children (see settlor interested trusts);
  • R185 (LSDB) where a trustee pays out money funded by a taxable pension lump sum after the pension holder’s death, which must be given within 30 days;
  • R185 (Estate Income) from personal representatives during an estate administration, covered in income tax and CGT during estate administration;
  • the plain R185 for annuities and other annual payments.

What do the main boxes show?

Box What it contains Where the beneficiary puts it
1 Discretionary payments from trusts that are not settlor interested, and the tax credit at the trust rate SA107 box 1, or R40
2 Discretionary payments from a settlor interested trust to someone other than the settlor, not grossed up SA107 box 2; treated as taxed with nothing more to pay
3 Non savings income, such as rent, from an interest in possession trust, net of tax, and the tax paid SA107 box 3, or R40
4 Savings income, such as interest, net of tax, and the tax paid SA107 box 4, or R40
5 Dividend type income net of tax, and the tax paid SA107 box 5, or R40
6 Untaxed income, including income within the trust’s tax free amount The return pages for that type of income, not SA107
7 Foreign income, with UK and foreign tax SA106 Foreign pages
8 Stock or scrip dividends The scrip dividend boxes of the main return

Box 25 gives the residential property finance costs a beneficiary of a non discretionary trust needs to claim the tax reduction for those costs.

How is a discretionary payment taxed?

When trustees of a UK resident discretionary trust pay out income, the payment is treated as made after tax at 45%. The beneficiary’s income is the net payment grossed up at that rate, and the credit can be used against their liability or repaid (TSEM3756). The trustees must have paid enough tax, through the tax pool, to cover the credit; any shortfall is their problem, not the beneficiary’s.

A non taxpayer, a basic rate taxpayer or a higher rate taxpayer can reclaim some or all of the credit. An additional rate taxpayer has nothing more to pay and nothing to reclaim. Scottish taxpayers use Scottish rates.

Illustration only

Trustees pay a beneficiary £5,500. Box 1 shows £5,500 with a tax credit of £4,500, so the gross income is £10,000. If the whole £10,000 falls within the beneficiary’s personal allowance, they reclaim £4,500. If it all falls in their basic rate band, their tax is £2,000 and they reclaim £2,500. If it all falls in the higher rate band, their tax is £4,000 and they reclaim £500.

How is income from an interest in possession trust taxed?

A beneficiary entitled to the income of an interest in possession trust is taxed on their share as it arises, after trust expenses. The trustees will usually have paid 20% on non savings and savings income and, for 2026 to 2027, 10.75% on dividends. The beneficiary gets credit for that tax. A basic rate taxpayer normally has nothing more to pay; a higher rate taxpayer pays the difference through Self Assessment.

HMRC’s example in TSEM3765 has trustees with rent of £2,000 paying tax of £400 and passing £1,600 to the beneficiary, who is taxed on £2,000 with £400 credit. Box 3 of the R185 shows £1,600 net and £400 tax.

Repayments are limited. A beneficiary can reclaim the tax on income covered by their available personal savings allowance, dividend allowance, trading allowance or property allowance, but only up to the allowance they have left after their other income. If the trustees mandate income straight to the beneficiary without paying tax first, the beneficiary must include it on their own Self Assessment return.

How do you report R185 income on a tax return?

Copy boxes 1 to 5 to the matching boxes on the SA107 Trusts etc pages, and the other boxes to the pages shown in the table. Do not send the R185 itself unless HMRC asks for it. Someone who does not normally file and needs to pay extra tax must register for Self Assessment by 5 October after the end of the tax year in which they received the income; see who needs to file a tax return and Self Assessment deadlines and penalties.

How do you reclaim tax without a tax return?

Use form R40. The R185 notes map each box: box 1 to boxes 4.2 and 4.3, box 2 to box 4.8, box 3 to boxes 4.4 and 4.5, box 4 to boxes 4.6 and 4.7, and box 5 to boxes 4.9 and 4.10. A separate R40 is needed for each tax year, and claims can go back four years before the current one. Box 2 amounts appear on the R40 for completeness, but that credit is never repaid.

What about settlor interested trusts?

A discretionary payment from a settlor interested trust to anyone other than the settlor goes in box 2 at the actual amount paid. The beneficiary is treated as having paid tax at the additional rate on it, so there is no more to pay, but the credit is ring fenced and cannot be repaid or used against other income (TSEM3757). Payments to the settlor are not taxed again and are left off the form.

What mistakes come up most often?

  • Grossing up box 2. Box 2 is entered at the actual amount.
  • Treating capital as income. A payment out of trust capital, including accumulated income, is normally capital in the beneficiary’s hands and not taxable (TSEM3781), so it should not appear on an R185.
  • Putting box 6 or box 7 income on SA107 instead of the relevant pages.
  • Missing old refunds. Discretionary beneficiaries on low incomes can have several years of credits to reclaim, and the four year limit removes the oldest each year.
  • Reclaiming too much on interest in possession income where allowances have already been used.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.