Changes to Trust taxation
As we quite often find, the Budget speech and corresponding headlines don’t cover all of the actual Budget proposals.
Following a consultation earlier in the year, the Government has announced that it will be legislating the proposals outlined as part of simplification reforms.
From April 2023:
There will be technical amendments to ensure for beneficiaries of Estates that their tax credits and savings allowance continue to operate correctly.
From 2024/25:
- Trusts and Estates with income up to £500, from any source, will not pay tax on that income as it arises. Where a settlor has made other trusts, the amount is the higher of £100 or £500 divided by the total number of existing trusts (subject to some exceptions).
- Discretionary Trusts will now pay the highest rates of tax (45% and 39.35%) on all of their income. The current starting rate band, which applies the basic rate (20%) and dividend ordinary rate of tax (8.75%) to the first £1,000 slice of income, will be abolished.
- Beneficiaries of UK estates will not pay tax on income distributed to them that is within the £500 limit for the Personal Representatives
The taxation of Trusts and Estates is complex, and you should ensure that you are meeting all of your filing obligations. For help or advice, contact the team at CKLG.
