CGT—basic principles for trusts
CGT—basic principles for trusts

The following Private Client guidance note provides comprehensive and up to date legal information covering:

  • CGT—basic principles for trusts
  • General principles
  • Transfers into trust
  • Trustees making actual disposals—computational rules
  • Trustees making deemed disposals
  • Reliefs and exemptions
  • Transfers between settlements
  • Disposing of an interest in a trust
  • Miscellaneous points

FORTHCOMING CHANGE: As originally announced at Autumn Budget 2017 and followed up by written statement after Spring Statement 2018, plus an announcement in Budget 2018, the government ran a consultation on the taxation of trusts from 7 November 2018 to 28 February 2019, inviting views on the principles of transparency, fairness and simplicity that it believes should underpin the taxation of trusts. In response, in July 2019, the Office of Tax Simplification issued its second report on inheritance tax. See also the report published by the All-Party Parliamentary Group for Inheritance & Intergenerational Fairness in January 2020 recommending the adoption of a new inheritance tax regime. See also the research exploring the use of trusts which was also published on 7 November 2018. See News Analysis: Exploring the consultation and review on the taxation of trusts.

General principles

For capital gains tax (CGT) purposes, trustees are treated as a single chargeable person in their own right (separate from the individual trustees themselves). The rules for computing a chargeable gain made by trustees is very similar to those which apply to an individual.

Trustees may wish to sell trust assets if they consider, in accordance with their duties as trustees (for further guidance on trustees’ duties, see Practice Note: Trustees—duties), that it is in the interests of the beneficiaries to do