Paul Davies

This Practice Note explains that a ‘bare trust’ is an arrangement where the legal ownership of property is in a different name from that of the person beneficially entitled to it. It considers some of the situations in which a bare trust might arise and why they might be used, the inheritance tax (IHT) status of a bare trust and the duties of a bare trustee.

This Practice Note explains how trustees of bare trusts are treated for income tax and capital gains tax (CGT) purposes. It provides examples of bare trusts and the reporting and compliance obligations of trustees and beneficiaries of such trusts.

This Practice Note considers the basic capital gains tax (CGT) principles which apply to trusts, including the CGT consequences of an individual transferring property into a trust, the trustees making actual or deemed disposals of trust property and transfers between trusts.

This Practice Note provides an overview of hold-over relief from capital gains tax (CGT), with particular emphasis on the operation of the relief in the context of trusts. It also explains the conditions that need to be satisfied in order to claim hold-over relief, how to make and withdraw a claim and the restrictions on the relief, including in the context of settlor-interested trusts and transfers to non-UK residents.

This Practice Note considers the main principles of income tax that apply to the beneficiary of a discretionary trust. It covers the source of a beneficiary's income and the calculation of taxable income and income tax.

This Practice Note explains how income tax applies to discretionary trusts (and trusts where income may be accumulated). It includes a discussion of the types of income a trust may receive, deductions the trust may make (trust management expenses (TMEs)) and the rates of tax that apply.

This Practice Note considers when it is possible for a trust to leave the UK (so that there are non-UK resident trustees going forward), the tax consequences of migration from the UK (including the exit charge on the deemed disposal of assets under section 80 of the Taxation of Capital Gains Act 1992 (TCGA 1992), relief from the exit charge and recovery from past trustees under TCGA 1992, s 82) and the circumstances in which emigration should be considered. The judgment in Trustees of the P Panayi Accumulation & Maintenance Settlements v HMRC, Case C-646/15 issued on 14 September 2017 and the relevant provisions of Finance Act 2019 are also considered.

This Practice Note sets out the general principles of income tax that apply to trusts under which one or more beneficiaries have an interest in possession. For more information about the meaning of ‘interest in possession’ see Practice Notes: The meaning of qualifying interest in possession and Creation of trusts–life interest trusts.

This Practice Note explains how to calculate the amount of inheritance tax (IHT) that arises on a chargeable lifetime transfer (CLT), also called an immediately chargeable transfer (ICT), including how grossing up and the timing of the transfers affect the calculation. In general terms, the lifetime charge will apply to individuals who transfer property into a trust that is subject to the relevant property regime.

This Practice Note considers the inheritance tax (IHT) treatment of an age 18–25 trust. It also sets out briefly how to calculate the amount of IHT payable when an age 18–25 trust comes to an end.

This Practice Note sets out how trustees and personal representatives (PRs) are charged to income tax on the income of a property business (for example, if a trust owns rental properties or a deceased person owned rental properties). The general tax principles of property businesses that apply to individuals also apply to trustees or PRs and this Practice Note sets out those basic principles as they apply to trustees and PRs, including the rules on allowable expenses and losses. This Practice Note does not cover the tax treatment of property income classed as trading income.

This Practice Note outlines the general tax principles of trading which apply to trustees or personal representatives. It includes a discussion about what constitutes a trade, how profits are determined where trustees are carrying on a trade and how trade losses can be used.

This Practice Note considers the inheritance tax (IHT) treatment of a bereaved minor's trust (TBM or BMT). It also outlines how to calculate the IHT payable when the trust comes to an end.

This Practice Note explains how losses incurred by trustees may be used and the restrictions on their use.

This Practice Note considers the availability of BADR (BADR), formerly entrepreneurs' relief, to trustees. BADR provides for a reduced rate of capital gains tax (CGT) on certain disposals of business assets and may be claimed by trustees in certain circumstances.

This Practice Note sets out the key CGT reliefs and exemptions applicable to business assets which are available to trustees (as well as individual business owners), including business asset roll-over relief, incorporation relief, EIS and SEIS reliefs, relief on company reorganisations and relief for losses on loans to traders.

This Practice Note outlines the taxation of investment income which applies specifically to trusts. It explains how trustees are taxed on interest, on savings income, dividend income, insurance bonds and estate income accruing to trustees of a Will trust.

This Practice Note explains how and when income tax should be paid by trustees of a trust. It considers when payments on account of income tax will be required and how they can be made, as well as considering briefly how and when payments of capital gains tax (CGT) are made by trustees.

This Practice Note considers the ways in which a trust may be restructured or varied, the reasons for doing so and the potential tax implications of restructuring or varying a trust.

This Practice Note, written by Paul Davies of Clarke Willmott, explains how to identify whether a trust is a single trust or comprises more than one settlement. It explains the tax treatment of sub-funds within a trust, how and when a sub-fund election can be made as well as the conditions which must apply for the election to be possible.