Taxation of trusts—capital losses
Taxation of trusts—capital losses

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

  • Taxation of trusts—capital losses
  • Trustees' use of losses
  • Anti-avoidance

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.

Capital losses arising to trustees are calculated in the same way as they are for individuals (for further guidance on capital losses for individuals, see Practice Note: CGT—utilising capital losses). Capital losses are automatically set against any gains of the same year of period of assessment; any that are unused can be carried forward and set against gains arising in subsequent years. They cannot be carried back and set against gains of a previous year.

Losses brought forward are only set against gains of subsequent years