Consultation on the taxation of trusts published by HMRC

20 Nov 2018

Paper hats

Following up a pledge in the 2017 Budget, HM Revenue & Customs (HMRC) launched a consultation looking at the taxation of trusts earlier this month.

Peter Harker, a partner at Saffery Champness commented:

“This consultation/review will be of interest to many of our estate and farm business clients who use trusts as a mechanism within their business structure for a variety of reasons, such as safeguarding funds or holding business property or other assets for the benefit of family members.”

The consultation sets out the principles that government thinks should underpin the taxation of trusts – transparency, fairness and simplicity – and seeks views and evidence for and against reform.

The element of transparency has already seen some action by government, but the objectives signposted in the consultation are to ensure that the ownership of assets held in trust, the benefits arising from them, and the details of those who will benefit, are not hidden. Non-resident trusts are also an area in which the consultation places particular emphasis.

Peter Harker says:

“The government appears to be seeking a simpler regime, one that is easy for all to understand, that neither produces unfair outcomes nor, importantly, facilitates tax avoidance or evasion, which HMRC appears to be concerned that trusts are being used to facilitate.

“Trusts provide an important and useful vehicle for many families to protect and manage their wealth, however the current taxation regime is complex and can be burdensome. Therefore, this review of trust taxation is welcome and we hope that it will lead to both simplification and the increased use of trusts.”

The consultation runs until 30 January 2019.

To discuss this further, please contact Peter Harker or your usual Saffery Champness contact.