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Taxing Times for Trusts
Trustees of discretionary trusts who have found that recent tax changes have resulted in an unacceptably high level of taxation (especially as regards trust income from dividends) should give consideration to the possibility of amending the trust to give a beneficiary the right to receive income from the trust, by the creation of a revocable income settlement.
Amending the trust in this way gives the trustees the flexibility to revoke the beneficiary’s right to receive income should it be necessary. It also changes the tax position such that the trust is taxed at the basic rate of tax and the additional rate tax charge is avoided. The beneficiary is then allowed to reclaim tax paid on income if they have ‘unused’ personal allowances.
Please contact Roger Stone at Chichester or Sarah Evans at Selsey for more information.