Q&As

Where a disabled person's trust is created for a 16-year old child by their parents, will holdover relief be available for capital gains tax purposes on the entry of assets into the trust? Will the trust be settlor-interested for income tax purposes given that the settlor's unmarried minor child will be the beneficiary of the trust?

read titleRead full title
Published on LexisPSL on 16/03/2021

The following Private Client Q&A provides comprehensive and up to date legal information covering:

  • Where a disabled person's trust is created for a 16-year old child by their parents, will holdover relief be available for capital gains tax purposes on the entry of assets into the trust? Will the trust be settlor-interested for income tax purposes given that the settlor's unmarried minor child will be the beneficiary of the trust?
  • Is holdover relief from CGT available on transfer of assets into a disabled person's trust?
  • Will the trust be settlor-interested for income tax purposes?

Where a disabled person's trust is created for a 16-year old child by their parents, will holdover relief be available for capital gains tax purposes on the entry of assets into the trust? Will the trust be settlor-interested for income tax purposes given that the settlor's unmarried minor child will be the beneficiary of the trust?

We assume that the disabled child referred to qualifies as a disabled person under section 89(B)(2) of the Inheritance Tax Act 1984 (IHTA 1984) and Schedule 1A to the Finance Act 2005 (FA 2005).

Where a parent wishes to settle property on trust for a disabled child and benefit from the favourable tax treatment under IHTA 1984, ss 89 or 89B(1)(c), they can establish a:

  1. discretionary disabled trust under which, during the life of the disabled person, no interest in possession in settled property subsists and which provides that (for trusts established on or after 8 April 2013) a maximum of £3,000 or 3% of the value of the trust fund can be paid to somebody other than the disabled person each year. Where these conditions are satisfied and the disabled person qualifies as such at the time when the property is transferred into the settlement, the disabled person is treated as beneficially entitled to an interest in possession in the settlement property (ie an interest in possession (IIP) is

Related documents:

Popular documents