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Basic principles of CGT for trusts


Produced by Tolley in association with
Trusts and Inheritance Tax
Guidance
tag-icon Spring Budget 2024

Basic principles of CGT for trusts


Produced by Tolley in association with
Trusts and Inheritance Tax
Guidance
tag-icon Spring Budget 2024
imgtext

Introduction

The trustees of a settlement are treated as a single person for capital gains tax purposes: that is to say, the trust is treated as a separate and single taxable entity. Capital gains tax is charged when the trustees (as a body) make a chargeable disposal. Such a disposal may arise when trustees sell or transfer trust assets in the course of administration of the trust. However, in addition to these β€˜actual disposals’ of assets, there are occasions when trustees are β€˜deemed’ to have made a disposal and capital gains tax is charged accordingly. In summary, deemed disposals arise when the nature of entitlement to the assets changes. See the Deemed disposals guidance note. The same principles of calculation apply to both actual and deemed disposals.

Residence

If trustees (as a whole) are treated as UK resident, the trust is chargeable to capital gains tax on the disposal of assets wherever situated.

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Paul Davies
Paul Davies

Partner at DWF LLP

I am a partner in the private client department of DWF LLP, based in Manchester. I specialize in providing advice on tax and succession planning to high net worth individuals, executors and trustees. I will assist clients in the creation of wills and lasting powers of attorney and in the creation, restructuring, and dissolution of trusts and other wealth holding vehicles whether onshore or offshore. I often act as a professional executor and trustee.. Β  He has chaired the ICAEW's Employment Taxes & NIC Committee for many years and is a past chairman of the Institute's Tax Faculty. He is also a member of two relevant technical sub-committees of the CIOT.

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  • 07 Mar 2024 13:51

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