Taxation of Trusts

– a recent technical event held by the London Tax Society, article written by Piotr Kozlowski

London Tax Society (LTS), a forum for young professionals working in the UK tax services, held another of its periodic after-work technical seminars at the beginning of April.

The event focused on the taxation of trusts and included a presentation on the topic by Claire Skipper from the Dixon Wilson firm of chartered accountants, who provided an overview of the subject starting from the basic definitions of what trusts are, whom they involve and what purposes trusts serve.

In her presentation, Claire outlined the various types of trusts, how they differ and who would normally use them. Another topic discussed in the presentation was the issue of domicile and tax residence – what they mean, how they are determined and their implications are for trusts, their donors, trustees and beneficiaries.

The natural next step in Claire’s presentation was to describe when and how trusts are subject to taxation, including taxes at the point of gifting assets to the trust, the principal charge (which is a tax applied every 10th year anniversary of a trust’s creation) and exit charges.

In the latter part of the seminar, Claire presented a couple of real-life case studies, where she drew on her extensive experience of assisting her multiple clients with setting up as well as managing their trusts and answering tax queries related to them.

The final segment of the presentation was dedicated to some practical points, including the use of various standard HMRC forms: IHT100 (used to notify HMRC of chargeable events when IHT is payable on a trust); IHT122 (application for IHT reference); and IHTD42 (used to confirm that no IHT is payable).

The presentation was followed by a Q&A session and some informal networking when the presenter, event attendees and organisers enjoyed a chance to chat informally about their professional and personal interests with a glass of wine in hand.

Share: