CheckLists.Tax (beta)
i12. Termination of the trust
INCOME TAX
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Loans
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- Query whether loan to trust by close company should be treated as written off/released
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- HMRC raise the issue at CTM61670.
Legislation:
Cases:
HMRC manuals: CTM61670.
Commentary:
See also:
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CAPITAL GAINS TAX
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- Matching gains of non-resident trust to benefits (s.87)
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- Termination is a capital payment
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- Any occasion on which a person becomes absolutely entitled to trust property is a capital payment (s.97(2)(c)).
- Apply the matching rules: i9. Benefits provided by trust.
- Note the rules can also apply where the trust is currently UK resident but was previously non-resident.
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Legislation: TCGA s.87, s.89, s.97.
Cases:
HMRC manuals:
Commentary:
See also:
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- Capital payment/benefit to non-resident person not disregarded in year settlement ends
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Capital payment to non-resident in year settlement ends
- If two or more beneficiaries receive capital payments in the tax year the settlement ceases to exist, and at least one of those recipients is UK resident in that tax year, the capital payment is not disregarded under s.87D(2) (s.87F).
- Does not affect the disregard of payments to non-resident close companies (s.87C).
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Legislation:
Cases:
HMRC manuals:
Commentary:
See also:
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INHERITANCE TAX
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Gift with reservation of benefit
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- Trace gifted property into property leaving the trust
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- The gift is traced into the property leaving the settlement that represents or derives from the property originally comprised in the gift (Sch 20, para 5(2) and see also para 4A).
- Settlement income is included in the tracing unless it arises after the material date (i.e. the date of death or deemed PET) (para 5(5)). McCutcheon notes that this appears to be superfluous (7-124).
- If the donor becomes absolutely entitled to property at this time, that is excluded from the gift, but any consideration the donor gives to become absolutely entitled is included (para 5(2)).
Legislation: FA 1986, Sch 20;
Cases:
HMRC manuals:
Commentary: McCutcheon 7-124;
See also:
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