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:
For general guidance on the special income tax and capital gains tax (CGT) treatment of trusts for disabled persons, see Practice Note: Taxation of trusts for disabled persons—income tax and CGT. This Practice Note explains how an election for such special income tax and CGT treatment may be made.
There have been some important changes to the definition of a disabled person following HMRC's consultations. Firstly, the qualifying criteria have been extended to include people who are in receipt of Personal Independence Payments for care or mobility at either rate and to include people who receive the higher rate of Disability Living Allowance mobility component. Secondly, the anomaly which allowed a CGT free uplift on the death of the disabled person on interest in possession trusts but did not extend the same uplift to discretionary type trusts has been rectified. Both types of trust for disabled persons now benefit from the uplift.
Although it does not amount to reform as such, the third point to note is that the residence nil rate band allowance can be claimed where the ‘closely inherited’ gift is a gift to a trust in which a lineal descendant has an interest in possession which is a disabled person’s interest.
Rules across the tax system have been harmonised. Trustees of trusts established after 8 April 2013 can
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