These are Trusts where trustees have 'discretion' (ie choice) about how to use the income of the Trust and to whom to pay the income of the Trust. Sometimes Trustees are able to 'accumulate' income, add this to the Trust capital and pay both out at a later date, usually when the beneficiaries reach their age of entitlement.
Discretionary/Accumulation Trusts and Income Tax
All income in such Trusts are taxable and again have various rates. Discretionary payments of income to beneficiaries carries a tax credit (usually at 50% tax). Beneficiaries can often reclaim some of this tax if they pay income tax lower rates.
Discretionary/Accumulation Trusts and Capital Gains Tax
Where a capital gain arises in a Trust it is the responsibility of the trustees to pay the necessary capital gains tax.
Discretionary/Accumulation Trusts and Inheritance Tax
Sometimes inheritance tax is due when the assets are first put into the Trust, on the 10th anniversary of the Trust, when assets are taken out of the Trust or when the Trust ceases to exist.