The following Trusts and Inheritance Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
A trust may come to an end because it has run its course and comes to a natural end. If a trust has no assets , it ceases to exist. Alternatively, a trust ends because the trustees or beneficiaries decide to wind it up: the trustees distribute the assets by exercising their powers of appointment or advancement given in the trust instrument.
The ‘natural end’ category covers such situations as:
the life tenant dies and the fund is to be distributed to the remaindermen
the last beneficiary attains the age, or other specified contingency, on which beneficiaries become absolutely entitled to both capital and income
in a discretionary trust, all of the potential beneficiaries have died or no longer qualify as beneficiaries
there are no assets left in the trust
the trust has contravened the perpetuities rule
The current law provides that the perpetuity period for any trust which commenced after 5 April 2010 is 125 years. Before the introduction of the fixed 125-year period, settlors could choose a period calculated with reference to named ‘lives in being’ plus 21 years, or a fixed period of 80 years. Details of the period chosen should be in the trust instrument. If it is impossible to determine how long the perpetuity period is, (because, for example, the specified lives in being are untraceable), the current law allows trustees to substitute a fixed perpetuity period of 100 years.
The ‘decision’ category includes the following situations:
the beneficiaries, who are all of full age and capacity agree to terminate the trust under the rule in Saunders v Vautier
See the Partitioning trust funds guidance note
the trustees of a discretionary trust decide that the trust has fulfilled its purpose (eg to educate the beneficiaries)
the financial costs of maintaining the trust outweigh its usefulness
a discretionary Will trust is distributed following the death of the principal beneficiary (eg the spouse of the testator)
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
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
The basic rule is that all benefits provided to an employee by reason of their employment are taxable unless there is a specific exemption or other rule that means they are not chargeable to tax.ExemptionsThe main exemptions for employee benefits are in ITEPA 2003, ss 227–326B (Pt 4).Below is an
The corporate interest restriction (CIR) essentially limits the amount of interest expense a company can deduct from its taxable profits if the interest expense is over £2 million. The actual mechanics of the CIR calculation are highly complex (the legislation is over 150 pages long) and are
Class 1 and Class 1AClass 1 and Class 1A are the categories of NIC that can be charged on expenses reimbursed and benefits provided to employees. These classes are mutually exclusive. A benefit cannot be subject to both Class 1 and Class 1A NIC. Three requirements must be met before Class 1A NIC is
To view our latest tax guidance content, sign in to Tolley Guidance or register for a free trial.