TSEM8140 - Trust management expenses: 鈥榩roperly chargeable to income鈥� in general trust law: HMRC v Peter Clay: what should be charged to capital
The Court of Appeal decision in HMRC v Peter Clay states that 鈥業t is common ground - and, if it were not, this Court would be bound by the authority of Carver v Duncan so to hold - that expenses which are (for the benefit of the whole estate) are to be charged against capital.鈥�
Sir John Chadwick remarked that the Special Commissioners were wrong when they decided that 鈥榠n the light of the general principle of fairness鈥�, anything that is for the benefit of both the income and capital beneficiaries could be apportioned between income and capital.
He confirms the Carver v Duncan principle that 鈥榰nder the general law, expenses incurred for the benefit of both the income and capital beneficiaries must be charged against capital鈥�.
So any expense that benefits both capital and income should be charged wholly against capital, and cannot be apportioned in any way.