Capital gains tax

When individuals gift non-cash assets into trust the settlor is making a disposal for capital gains tax purposes and tax may be payable if the assets have grown in value since they were first acquired by the settlor.

There are, however, two exceptions to this; the first is where the assets concerned are business assets and the second is where the gift into trust is one that is a chargeable transfer for inheritance tax purposes (regardless of whether inheritance tax is actually paid or not).

People who are considering creating a trust should seek professional advice to ensure that they do not inadvertently gift assets into trust which triggers a capital gains tax charge.

During the currency of the trust, trustees may sell trust assets and hope to make a profit for the beneficiaries. The sale may produce a profit in which case the trustees may have to pay capital gains tax. When trustees distribute assets such as investments or property to beneficiaries the trustees may have to pay capital gains tax if there has been an increase in value in the assets since the trustees acquired them.

It is very important that trustees seek professional advice before selling trust assets and making distributions to beneficiaries to ensure that capital gains tax can be avoided.

For anything further, one of our specialists would be delighted to meet you either in our office or in your own home to talk through your requirements and answer any questions. Please contact us at any time.