Taxation of trusts for disabled persons—income tax and CGT
Produced in partnership with Phillipa Bruce-Kerr of Harrison Clark Rickerbys and Lynne Bradey of Wrigleys Solicitors LLP
Taxation of trusts for disabled persons—income tax and CGT

The following Private Client guidance note Produced in partnership with Phillipa Bruce-Kerr of Harrison Clark Rickerbys and Lynne Bradey of Wrigleys Solicitors LLP provides comprehensive and up to date legal information covering:

  • Taxation of trusts for disabled persons—income tax and CGT
  • Reform
  • The capital gains tax and income tax legislation
  • Claim for special tax treatment
  • Definition of a vulnerable person
  • Qualifying trusts
  • Election for special tax treatment
  • Events causing the election to cease to be in force
  • Effect of an election
  • Special income tax treatment
  • more

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.

This Practice Note sets out the special income tax and capital gains tax (CGT) treatment of trusts for disabled persons. For guidance on how to make a vulnerable person election for the purposes of income tax and CGT, see Practice Note: Taxation of trusts for disabled persons—vulnerable person election.

Reform

There were some important changes to the definition of a disabled person following HMRC's consultation in 2013. Firstly, the qualifying criteria have been extended to include people who are in receipt of Personal Independence