Partitioning trust funds

Produced by a Tolley Trusts and Inheritance Tax expert
Trusts and Inheritance Tax
Guidance

Partitioning trust funds

Produced by a Tolley Trusts and Inheritance Tax expert
Trusts and Inheritance Tax
Guidance
imgtext

Overview

Partitioning a trust fund refers to splitting the fund between the income and capital beneficiaries. This will terminate the trust. This guidance note looks at how and when a trust can be partitioned and the tax effects of this. Partitioning a trust should be done by deed. Under the Legal Services Act 2007, writing deeds is a ‘reserved legal activity’ and should only be undertaken by a person authorised to do so under that Act. See the Reserved legal services guidance note for further information.

Resettlements are covered in the Resettlements and sub-funds guidance note, and variations are covered in the Variations guidance note.

This guidance note deals with the position in England and Wales only. See Simon’s Taxes I5.8 for details of the provisions affecting Scotland and Northern Ireland.

Reasons for partitioning a fund

Reasons for partitioning a fund might include:

  1. the reason that the trust was set up no longer being relevant

  2. the needs of a specific beneficiary

  3. tax mitigation

  4. the wish to reduce trust administration

Continue reading the full document
To gain access to additional expert tax guidance, workflow tools, generative tax AI, and tax research, register for a free trial of Tolley+™
Powered by Tolley+

Popular Articles

What are connected companies for loan relationship purposes ― practical approach

What are connected companies for loan relationship purposes ― practical approachBrief overview of the rulesThe loan relationships legislation applies to any ‘money debt’ arising from the lending of money entered into by a company, either as a lender or borrower. The rules are contained in CTA 2009,

20 Apr 2021 16:00 | Produced by Tolley Read more Read more

Premiums on the grant or surrender of a lease

Premiums on the grant or surrender of a leasePremiums on the grant of a lease ― outlineWhen a property investor grants a lease, potentially this could be done on the basis that the tenant pays a premium for the initial grant of the lease, in addition to also paying rent over the term of the lease.

14 Jul 2020 12:58 | Produced by Tolley in association with Rob Durrant-Walker of Crane Dale Tax, part of AMS Group Read more Read more

Interest and penalties on late paid tax under self assessment

Interest and penalties on late paid tax under self assessmentInterestIf the capital gains tax, the balancing payment or payments on account of tax and / or Class 4 national insurance contributions (NIC) are paid late, HMRC will charge interest on the amount overdue from the original due date. The

14 Jul 2020 12:00 | Produced by Tolley Read more Read more