CGT concessions for disabled and vulnerable beneficiaries

Produced by Tolley
CGT concessions for disabled and vulnerable beneficiaries

The following Trusts and Inheritance Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • CGT concessions for disabled and vulnerable beneficiaries
  • Introduction
  • Annual exemption
  • Vulnerable beneficiary relief
  • Tax-free uplift on death
  • Hold-over relief
  • Private residence relief

Introduction

Finance Act 2013 introduced harmonising amendments to all the qualifying conditions for trusts for disabled persons and other vulnerable beneficiaries. See the Disabled and vulnerable beneficiary trusts ― uniform definitions guidance note. Prior to the FA 2013 changes, it was a confusing trail through the tangle of CGT concessions aimed at trusts for vulnerable people. Not only did they conflict with the concessions for other taxes, the provisions for capital gains tax were not consistent. The new rules in Finance Act 2013 attempt to apply uniform conditions for all special provisions for disabled and vulnerable beneficiary trusts with effect from 2013/14. Finance Act 2014 made further adjustments.

However, where the new rules have become more restrictive, trusts already in existence, or included in a Will drafted before 8 April 2013, and satisfying the old conditions, will continue to qualify under the old conditions. The change to more restrictive qualifying conditions relates principally to the application of capital within the trust. Under old rules, trusts qualified for the disabled person’s concessions for annual exemption and hold-over relief if at least half of the capital applied was applied for the benefit of a disabled person. Under the new rules, all of the capital applied (except for a small annual limit) is to be so applied.

This guidance note deals with each special CGT provision for trusts with a vulnerable beneficiary and, where applicable, explains the position before and after the changes introduced by Finance Act 2013 and Finance Act 2014. Note that some provisions apply only to trusts for a disabled person, and do not cover the other category of vulnerable beneficiary, a young person under the age of 18, one of whose parents has died.

Annual exemption

The CGT annual exemption for trusts is one half of the personal annual exemption. Where a settlor has created more than one trust, the trust annual exemption is shared between them, subject to a minimum annual exemption equivalent to one tenth of

There’s no margin for error.
Think Tax.
Think Tolley.
TolleyGuidance gives you direct access to critical, comprehensive and up-to-date tax information and expertise you can rely on.
Take a free trial
Popular documents
LEXISNEXIS

Subsistence expenses

IntroductionSubsistence is the amount incurred as a consequence of business travel. Typically it relates to accommodation and meal costs incurred. These amounts are allowed because they are associated with the necessary travel. See the Travel expenses guidance note for more information of when

LEXISNEXIS

Foreign tax relief

Income and gains may be taxable in more than one country. The UK has three ways of ensuring that the individual does not bear a double burden:1)treaty tax relief may reduce or eliminate the double tax 2)if there is no treaty, the individual can claim ‘unilateral’ relief by deducting the foreign tax

LEXISNEXIS

Automatic remittance basis

IntroductionUK resident individuals who are non-UK domiciled can benefit from the remittance basis of taxation. The remittance basis allows for relief from UK taxation for non-UK sources of income which are not brought in (or remitted) to the UK. A remittance is any money or other property which is,

LEXISNEXIS

Utilising the capital gains tax annual exemption

Why is this important?Tax-free amountEach individual, whether or not they are resident in the UK, is entitled to an annual exempt amount when calculating the taxable amount of their chargeable gains for the tax year (although see the exceptions below). The annual exempt amount is also known as the