Trusts 2 Flashcards
Can a Bare Trust claim CGT holdover relief?
Only on business assets
What can all other Trusts claim with regards to CGT holdover relief?
They can claim it even if it is not on business assets.
How is the income under a Bare Trust taxed?
At the beneficiaries highest rate, however all personal allowances are available
Who would be taxed on transfer of property or shares into a Bare Trust?
The Settlor
What happens if the interest produced by a Bare Trust exceeds £100 per year?
If the Settlor is a Parent, the whole amount gets taxed on them
How is income taxed in an Interest in Possession Trust?
At basic rate on the Trustees, then either a reclaim or further tax to pay by the benficiary
How much tax would an additional rate taxpayer pay on a dividend distribution from an IIP Trust?
30.6% (38.1% minus 7.5%)
What allowances can the Trustees use within an IIP Trust?
Half the CGT allowance of £5,550
Can the Trustees claim expenses against tax relief on an IIP Trust?
No
Who pays the IHT on death on an IIP Trust?
The Remaindermen
What is the tax treatment of income within a Discretionary Trust?
Trustees are liable for basic rate up to £1,000 and then additional rate tax above £1,000. Beneficiaries can then reclaim all, some or none of tax depending on their tax position
What personal allowances do Trustees have under a Discretionary Trust?
Only the half CGT exemption of £5,550 but they can claim expenses against tax.
How do you calculate the income tax due on distributions from a VPT?
Take the Trustees liability and then the Beneficiaries liability and tax the difference.
What personal allowances are available to Trustees under a VPT?
Full personal allowance and CGT exemption
