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Taxation of Trusts

2 Part Course  |  From the Basics to Understanding More Complex Issues

Taxation of Trusts Training Course

A one-day course presented in two half-day live webinars

Video Overview

Click to watch a course overview
and meet your trainer.

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  • The trainer is a Chartered Accountant with over 30 years’ experience in Tax Training
  • Unlike most tax trainers, he has wide-ranging experience in lecturing in the financial services industry, including for many regulatory examinations
  • There are many numerical examples to aid understanding of potential tax exposure
  • Basic tax traps and planning areas are highlighted throughout, along with relevant cases

Part 1

At the end of Part 1 of the course, participants will have a good working knowledge of:

  • The different types of trust and the reasons for creating them
  • Technical terminology
  • Powers and duties of trustees, including
    • Appointment of agents by trustees
    • Trustees’ investment powers
  • The CGT position when assets enter or leave a trust
  • The Inheritance Tax position when assets enter or leave a trust
  • The Income Tax position of trustees
  • The Income Tax position of beneficiaries receiving income

Part 2

At the end of Part 2 of the course, participants will understand how tax issues can impact on asset-holding strategies involving UK and offshore trusts, including:

  • How Will trusts holding assets can still be useful in the era of transferable nil rate band
  • ‘Pilot trust’ structures and why they are now less effective
  • Using trusts to mitigate CGT charges
  • ‘Tax pool’ problems where discretionary trustees wish to distribute dividend income to beneficiaries
  • Use of revocable interest in possessions by discretionary trustees
  • Availability of business asset disposal relief to trustees
  • The tax advantages of ‘vulnerable beneficiary’ trusts
  • The tax charges arising on settlor-interested trusts
  • Trust strategies involving offshore bonds
    • Gift and loan trusts
    • Discounted gift trusts
  • Why investors may want to use offshore trusts
  • ‘Excluded property’ trusts
    • Why they are used in IHT planning by non-UK domiciled people

Part One

Legal background

  • What is a trust?
  • Role of the settlor and trustee
  • Overview of discretionary, interest in possession (IIP) and bare trusts, including why they are used
  • Key advantages of charitable trusts
  • The main provisions of the Trustee Act 2000
    • Trustees’ powers
      • Powers of investment
      • Appointment of agents
      • Policy statements 

CGT of trusts

  • Tax charges on creation
  • Disposals by trustees to beneficiaries or third parties
  • Importance of holdover relief
  • Clogged losses 

Inheritance Tax of trusts

  • The impact of the FA 2006 changes on creation of trusts
  • ‘Qualifying’ IIP trusts
    • Definition
    • Appointment of assets to beneficiaries
      • On death
      • While life tenant is alive
    • Non-qualifying IIP trusts and discretionary trusts
    • Appointment of assets to beneficiaries
      • Exit charges and 10-year charges (overview only)
    • IHT-efficient trusts for children
      • Trust for a Bereaved Minor
      • 18-25 trusts 

Income Tax charges on trustees and beneficiaries

  • The different rules and tax rates for IIP and discretionary trusts
  • Importance of the R185 form
  • Availability of personal savings allowance, etc.
  • ‘Tax pool’ issues for discretionary trustees
    • How making distributions may increase the trustees tax charge

Part Two

CGT of Trusts

  • Business asset disposal relief – availability to trustees
  • Using lifetime trusts to defer CGT charges
    • Case study on the CGT of winding up a trust 

Inheritance Tax of Trusts

  • Transferable nil rate band (NRB) and impact on Will trusts
  • Impact of trusts on availability of residence NRB
  • ‘Pilot trust’ structures
    • What they are
    • F(No.2)A 2015 changes to the tax rules 

Income Tax Charges on Trustees and Beneficiaries

  • ‘Tax pool’ issues for discretionary trustees
    • How making distributions may increase the trustees tax charge
    • Use of revocable interests in possession 

Other Trusts

  • Trusts for vulnerable beneficiaries
  • Settlor-interested trusts 

Investment Bonds Held in Trust

  • Brief overview of investment bonds
    • Why invest in them?
    • Tax rates applying
  • Who is liable for any tax charge on bonds held in trust?
    • Settlor, trustees, beneficiary or no-one
  • ‘Gift and loan’ trusts
    • What they are
    • How they are used in IHT planning
  • Discounted gift trusts
    • What they are
    • Why they are less useful than in the past for IHT planning
  • Practical problems and tax traps
    • Case study on the appropriateness of an investment bond for trustees of an interest in possession trust 

Offshore Trusts

  • Excluded property trusts
  • Anti-avoidance that can tax trust income or gains on UK settlors or beneficiaries

The trainer is a Chartered Accountant who qualified with PwC in 1988, spending his last 18 months there in the Corporate Tax department.

In 1989 he joined a leading financial training company as a tax tutor, teaching final level candidates for the ICAEW and ACCA examinations. Since 1992, he has been self-employed as a Professional Tutor and Training Consultant, specialising in tax update courses for accountants, lawyers and investment managers.

He has been teaching in the financial services industry since 1994. Although he concentrates on the professional development market these days, he is very experienced in teaching stock brokers, fund managers and financial advisors for their various regulatory examinations.

As a result, he is a tax specialist with (unusually) a very rounded knowledge of financial services products and markets. In 2012 this led to him undertaking Gapfill courses for the CISI.

He is a regular contributor to Taxation magazine and speaks at regional conferences of the ICAEW and CIOT.

Part 1 of this course introduces delegates to the main types of UK trust and their associated tax issues. No previous knowledge of trusts or UK tax is necessary. The course will be of use to those who have limited experience of trusts and those who need a refresher in this area. Differences between English and Scottish law will be covered where appropriate.

Part 2 of this course will build on delegates’ basic knowledge of UK tax and trusts by looking at more complex areas, including various scenarios where trusts can be used in tax planning. The course will contain some short case studies to demonstrate the practicalities involved as well as several numerical examples.

Those without a good working knowledge of both trusts and UK tax should attend Part I of the course before attending Part 2.

  • Well spoken and easy to follow. Kept on topic and easy to understand.
  • The Trainer described each section of the course with the help of slides. It was good having examples included.
  • The instructor was well versed and was able to articulate complicated points effectively and simply. I enjoyed that the course was split over 2 days.
  • We deal with the administration of trusts and so it was helpful to learn about events which may trigger a tax liability - we would usually instruct an account to prepare any returns. However, for planning purposes and general administration, issues such as VPEs & issuing R185's was really helpful to learn about as well as considerations to either selling assets within a trust or appropriating/ gifting them to a beneficiary.
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