{"id":15881,"date":"2023-08-03T04:12:45","date_gmt":"2023-08-03T04:12:45","guid":{"rendered":"https:\/\/www.theukrules.co.uk\/?page_id=15881"},"modified":"2023-09-20T04:43:13","modified_gmt":"2023-09-20T04:43:13","slug":"cgt","status":"publish","type":"page","link":"https:\/\/www.theukrules.co.uk\/rules\/employment\/taxation\/capital-gains\/trusts\/cgt\/","title":{"rendered":"UK Rules for Trusts and Capital Gains Tax (CGT) Explained"},"content":{"rendered":"<h2>When is Capital Gains Tax Usually Payable?<\/h2>\n<p><\/p>\n<p>You may need to pay Capital Gains Tax (CGT) after putting assets into a trust, after taking them out, or when the (either):<\/p>\n<ul>\n<li>Beneficiary receives some (or all) of the trust assets.<\/li>\n<li>Trustee(s) is no longer resident in the United Kingdom.<\/li>\n<\/ul>\n<p>The person responsible for paying tax when assets go into a trust will be the one who sells it to the trust or the &#8216;<a href=\"\/rules\/employment\/taxation\/capital-gains\/trusts\/\">settlor<\/a>&#8216; (transferor).<\/p>\n<p><strong>Note<\/strong>: Transferring the assets held in a &#8216;<a href=\"\/rules\/employment\/taxation\/capital-gains\/trusts\/types-of-trust\/\">bare trust<\/a>&#8216; to the beneficiary (usually a child under the age of eighteen) means there would be no tax to pay.<\/p>\n<p>As a rule, the trustee(s) must pay the tax after selling or transferring assets for the beneficiary (e.g. after taking them out of the trust).<\/p>\n<p>It is not uncommon to transfer an asset to another person (e.g. when an &#8216;<a href=\"\/rules\/employment\/taxation\/capital-gains\/trusts\/types-of-trust\/\">interest in possession trust<\/a>&#8216; ends, such as when the named person dies). In this case, Capital Gains Tax would not be payable.<\/p>\n<p><\/p>\n<hr>\n<p><\/p>\n<h2>When a Beneficiary becomes &#8216;Absolutely Entitled&#8217;<\/h2>\n<p>Most beneficiaries who are children get &#8216;absolute entitlement&#8217; when they reach the age of eighteen (18). Hence, they would get some (or all) of the assets held in the trust and would be able to give instructions to the trustees about managing them.<\/p>\n<p>As a result, the trustee(s) would need to pay Capital Gains Tax (CGT) based on the <a href=\"\/rules\/employment\/taxation\/capital-gains\/cgt-overview\/\">market value of assets<\/a> when the beneficiary received the entitlement.<\/p>\n<p><\/p>\n<hr>\n<p><\/p>\n<h2>CGT Rules for Non-Resident Trusts<\/h2>\n<p>The UK rules for <a href=\"https:\/\/www.gov.uk\/guidance\/non-resident-trusts\" target=\"_blank\" rel=\"noreferrer noopener\">non-resident trusts and Capital Gains Tax<\/a> are a complex matter. Thus, it is best to <a href=\"\/rules\/employment\/taxation\/income-tax\/help-and-advice\/\">get help with taxation<\/a> from a legal professional (e.g. an accountant).<\/p>\n<p><\/p>\n<hr>\n<p><\/p>\n<h2>Working Out Total Taxable Gains<\/h2>\n<p>HMRC guidance explains the process of <a href=\"https:\/\/www.gov.uk\/guidance\/trusts-and-capital-gains-tax\" target=\"_blank\" rel=\"noreferrer noopener\">working out how much Capital Gains Tax is due<\/a> in greater detail. Even so, some of the allowable costs that trustees can use to reduce the gains include:<\/p>\n<ul>\n<li>Costs of a property (includes administration fees).<\/li>\n<li>Fees for professional services (e.g. a solicitor, <a href=\"\/rules\/business\/stock-trading\/terminology\/\">stockbroker<\/a>).<\/li>\n<li>Payments for improving land or property to increase its value. A typical example would be the construction of a conservatory (excluding the cost of repairs or regular maintenance).<\/li>\n<\/ul>\n<p><strong>Note<\/strong>: Another section contains more information about the current <a href=\"\/rules\/employment\/taxation\/capital-gains\/trusts\/income-tax\/\">trusts and Income Tax rates<\/a> for the United Kingdom.<\/p>\n<p><\/p>\n<hr>\n<p><\/p>\n<h3>Gains Eligible for Tax Reliefs<\/h3>\n<p><\/p>\n<table style=\"width: 99%; color: #000000;\">\n<tbody>\n<tr>\n<td style=\"width: 30%; border-bottom-style: solid; border-bottom-width: 1px;\"><a href=\"\/rules\/employment\/taxation\/capital-gains\/entrepreneurs-relief\/\">Business Asset Disposal Relief<\/a><\/td>\n<td style=\"width: 70%; border-bottom-style: solid; border-bottom-width: 1px;\">Trustee(s) would pay 10% CGT on any qualifying gains after selling assets used in a beneficiary&#8217;s business once it ends. Relief may also be available after they sell shares in a company where the beneficiary held a minimum of 5% of shares and voting rights.<\/td>\n<\/tr>\n<tr>\n<td style=\"width: 30%; border-bottom-style: solid; border-bottom-width: 1px;\"><a href=\"\/rules\/employment\/taxation\/capital-gains\/gift-hold-over-relief\/\">Holdover Relief<\/a><\/td>\n<td style=\"width: 70%; border-bottom-style: solid; border-bottom-width: 1px;\">Trustee(s) would pay no tax if they transfer assets held in trusts to beneficiaries (other trustees may also qualify). The recipient would pay the tax after selling or &#8216;disposing of&#8217; the assets (unless they also claim the relief).<\/td>\n<\/tr>\n<tr>\n<td style=\"width: 30%; border-bottom-style: solid; border-bottom-width: 1px;\"><a href=\"\/rules\/employment\/taxation\/capital-gains\/cgt-when-you-sell-your-home\/\">Private Residence Relief<\/a><\/td>\n<td style=\"width: 70%; border-bottom-style: solid; border-bottom-width: 1px;\">Trustee(s) would pay no CGT after selling a property owned by the trust. It would need to be the main residence for someone who is allowed to live there &#8211; according to the rules of the trust.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><\/p>\n<hr>\n<p><\/p>\n<div class=\"category-wrapper\">\n<div class=\"list-content\">\n<h5>Trusts Tax-Free Allowance<\/h5>\n<p>After you <a href=\"\/rules\/employment\/taxation\/capital-gains\/cgt-overview\/\">work out if you need to pay<\/a>, Capital Gains Tax is due if the &#8216;total taxable gain&#8217; is more than the Annual Exempt Amount (e.g. AEA is the tax-free allowance for the trust).<\/p>\n<p>In the United Kingdom, the current tax-free allowance for a trust is:<\/p>\n<ul>\n<li>\u00a36,150<\/li>\n<li>\u00a312,300 (if it is one of the <a href=\"\/rules\/employment\/taxation\/capital-gains\/trusts\/vulnerable-beneficiaries\/\">trusts for vulnerable people<\/a>, such as a bereaved minor or a disabled person)<\/li>\n<\/ul>\n<p>The higher rate AEA allowance may still apply if there are multiple beneficiaries &#8211; even if only one is classed as a &#8216;vulnerable person&#8217;.<\/p>\n<p>But, if the &#8216;settlor&#8217; set up more than one trust (e.g. &#8216;settlements&#8217;) since the 6th of June 1978, HMRC may apply a reduction to the tax-free allowance.<\/p>\n<p><strong>Note<\/strong>: HMRC produces detailed guidance on <a href=\"https:\/\/www.gov.uk\/guidance\/capital-gains-tax-rates-and-allowances\" target=\"_blank\" rel=\"noreferrer noopener\">Capital Gains Tax rates and allowances<\/a> for previous years and how UK resident trusts are treated for CGT (using <a href=\"https:\/\/www.gov.uk\/government\/publications\/trusts-and-capital-gains-tax-hs294-self-assessment-helpsheet\" target=\"_blank\" rel=\"noreferrer noopener\">Self Assessment helpsheet HS294<\/a>).<\/p>\n<\/p><\/div>\n<div class=\"list-content\">\n<h5>Reporting Gains to HM Revenue and Customs<\/h5>\n<p>Trustees must have an account to <a href=\"https:\/\/www.tax.service.gov.uk\/capital-gains-tax-uk-property\/start\/report-pay-capital-gains-tax-uk-property\" target=\"_blank\" rel=\"noreferrer noopener\">report and pay Capital Gains Tax on UK property<\/a> (excluding a main home), no later than:<\/p>\n<ul>\n<li>Thirty (30) days of selling the property (for a completion date between the 6th of April 2020 and the 26th of October 2021).<\/li>\n<li>Sixty (60) days of selling the property (for a completion date since the 27th of October 2021).<\/li>\n<\/ul>\n<p>Trustees need to use a trust and estate Self Assessment tax return (<a href=\"https:\/\/www.gov.uk\/government\/publications\/self-assessment-trust-and-estate-capital-gains-sa905\" target=\"_blank\" rel=\"noreferrer noopener\">SA905<\/a>) for reporting a sale (or transfer) of any other assets held in the trust. Another section explains more about the <a href=\"\/rules\/employment\/taxation\/capital-gains\/trusts\/responsibilities-for-trustees\/\">tax responsibilities for trustees<\/a>.<\/p>\n<p><strong>Important<\/strong>: The rules differ <a href=\"\/rules\/employment\/taxation\/capital-gains\/cgt-overview\/\">if you make a loss on a chargeable asset<\/a> because you can deduct the amount from gains made in the same tax year.<\/p>\n<\/p><\/div>\n<\/div>\n<p><\/p>\n<hr>\n<p><\/p>\n<div class=\"content-inner-block\">\n<h4>Related Help Guides<\/h4>\n<p><\/p>\n<ul>\n<li><a href=\"\/rules\/employment\/taxation\/capital-gains\/trusts\/paying-and-reclaiming-tax\/\">Beneficiaries: How to pay and reclaim tax on trusts?<\/a><\/li>\n<li><a href=\"\/rules\/employment\/taxation\/capital-gains\/trusts\/types-of-trust\/\">Different types of trusts and how they work in the UK<\/a>.<\/li>\n<li><a href=\"\/rules\/employment\/taxation\/capital-gains\/trusts\/vulnerable-beneficiaries\/\">Parental trusts for children under eighteen (18)<\/a>.<\/li>\n<\/ul>\n<p><strong>Note<\/strong>: The main section has detailed information about <a href=\"\/rules\/employment\/taxation\/capital-gains\/trusts\/\">trusts and taxes<\/a> and how they&#8217;re taxed by HMRC in the UK.<\/p>\n<\/div>\n<p><\/p>\n<hr>\n<p><\/p>\n<div class=\"updated-data\">\n  <strong>Trusts and Capital Gains Tax (CGT) Guide for United Kingdom<\/strong><br \/><time datetime=\"2022-01-01\">Last Updated 2022<\/time>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>When is Capital Gains Tax Usually Payable? You may need to pay Capital Gains Tax (CGT) after putting assets into a trust, after taking them out, or when the (either): Beneficiary receives some (or all) of the trust assets. Trustee(s) is no longer resident in the United Kingdom. The person responsible for paying tax when&hellip; <a class=\"more-link\" href=\"https:\/\/www.theukrules.co.uk\/rules\/employment\/taxation\/capital-gains\/trusts\/cgt\/\">Continue reading <span class=\"screen-reader-text\">UK Rules for Trusts and Capital Gains Tax (CGT) Explained<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"parent":16607,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"inline_featured_image":false,"footnotes":""},"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.2 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>UK Rules for Trusts and Capital Gains Tax (CGT) Explained - UK Rules<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.theukrules.co.uk\/rules\/employment\/taxation\/capital-gains\/trusts\/cgt\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"UK Rules for Trusts and Capital Gains Tax (CGT) Explained - UK Rules\" \/>\n<meta property=\"og:description\" content=\"When is Capital Gains Tax Usually Payable? You may need to pay Capital Gains Tax (CGT) after putting assets into a trust, after taking them out, or when the (either): Beneficiary receives some (or all) of the trust assets. Trustee(s) is no longer resident in the United Kingdom. The person responsible for paying tax when&hellip; Continue reading UK Rules for Trusts and Capital Gains Tax (CGT) Explained\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.theukrules.co.uk\/rules\/employment\/taxation\/capital-gains\/trusts\/cgt\/\" \/>\n<meta property=\"og:site_name\" content=\"UK Rules\" \/>\n<meta property=\"article:modified_time\" content=\"2023-09-20T04:43:13+00:00\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.theukrules.co.uk\/rules\/employment\/taxation\/capital-gains\/trusts\/cgt\/\",\"url\":\"https:\/\/www.theukrules.co.uk\/rules\/employment\/taxation\/capital-gains\/trusts\/cgt\/\",\"name\":\"UK Rules for Trusts and Capital Gains Tax (CGT) Explained - UK Rules\",\"isPartOf\":{\"@id\":\"https:\/\/www.theukrules.co.uk\/#website\"},\"datePublished\":\"2023-08-03T04:12:45+00:00\",\"dateModified\":\"2023-09-20T04:43:13+00:00\",\"breadcrumb\":{\"@id\":\"https:\/\/www.theukrules.co.uk\/rules\/employment\/taxation\/capital-gains\/trusts\/cgt\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.theukrules.co.uk\/rules\/employment\/taxation\/capital-gains\/trusts\/cgt\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.theukrules.co.uk\/rules\/employment\/taxation\/capital-gains\/trusts\/cgt\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.theukrules.co.uk\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Alphabetical List of United Kingdom Rules and Regulations\",\"item\":\"https:\/\/www.theukrules.co.uk\/rules\/\"},{\"@type\":\"ListItem\",\"position\":3,\"name\":\"Employment Rules and Regulations UK\",\"item\":\"https:\/\/www.theukrules.co.uk\/rules\/employment\/\"},{\"@type\":\"ListItem\",\"position\":4,\"name\":\"Money and Taxes Explained | UK Tax and Taxation Laws Guide\",\"item\":\"https:\/\/www.theukrules.co.uk\/rules\/employment\/taxation\/\"},{\"@type\":\"ListItem\",\"position\":5,\"name\":\"Capital Gains Tax Guide 2022 | How Chargeable Gain Works\",\"item\":\"https:\/\/www.theukrules.co.uk\/rules\/employment\/taxation\/capital-gains\/\"},{\"@type\":\"ListItem\",\"position\":6,\"name\":\"Trusts and Taxation UK Guide | Different Types of Trusts\",\"item\":\"https:\/\/www.theukrules.co.uk\/rules\/employment\/taxation\/capital-gains\/trusts\/\"},{\"@type\":\"ListItem\",\"position\":7,\"name\":\"UK Rules for Trusts and Capital Gains Tax (CGT) Explained\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.theukrules.co.uk\/#website\",\"url\":\"https:\/\/www.theukrules.co.uk\/\",\"name\":\"UK Rules\",\"description\":\"The UK Rules\",\"publisher\":{\"@id\":\"https:\/\/www.theukrules.co.uk\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.theukrules.co.uk\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/www.theukrules.co.uk\/#organization\",\"name\":\"UK Rules\",\"url\":\"https:\/\/www.theukrules.co.uk\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.theukrules.co.uk\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/www.theukrules.co.uk\/wp-content\/uploads\/2023\/02\/logo-white.svg\",\"contentUrl\":\"https:\/\/www.theukrules.co.uk\/wp-content\/uploads\/2023\/02\/logo-white.svg\",\"width\":191,\"height\":23,\"caption\":\"UK Rules\"},\"image\":{\"@id\":\"https:\/\/www.theukrules.co.uk\/#\/schema\/logo\/image\/\"}}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"UK Rules for Trusts and Capital Gains Tax (CGT) Explained - UK Rules","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.theukrules.co.uk\/rules\/employment\/taxation\/capital-gains\/trusts\/cgt\/","og_locale":"en_US","og_type":"article","og_title":"UK Rules for Trusts and Capital Gains Tax (CGT) Explained - UK Rules","og_description":"When is Capital Gains Tax Usually Payable? You may need to pay Capital Gains Tax (CGT) after putting assets into a trust, after taking them out, or when the (either): Beneficiary receives some (or all) of the trust assets. Trustee(s) is no longer resident in the United Kingdom. The person responsible for paying tax when&hellip; Continue reading UK Rules for Trusts and Capital Gains Tax (CGT) Explained","og_url":"https:\/\/www.theukrules.co.uk\/rules\/employment\/taxation\/capital-gains\/trusts\/cgt\/","og_site_name":"UK Rules","article_modified_time":"2023-09-20T04:43:13+00:00","twitter_card":"summary_large_image","twitter_misc":{"Est. reading time":"4 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/www.theukrules.co.uk\/rules\/employment\/taxation\/capital-gains\/trusts\/cgt\/","url":"https:\/\/www.theukrules.co.uk\/rules\/employment\/taxation\/capital-gains\/trusts\/cgt\/","name":"UK Rules for Trusts and Capital Gains Tax (CGT) Explained - UK Rules","isPartOf":{"@id":"https:\/\/www.theukrules.co.uk\/#website"},"datePublished":"2023-08-03T04:12:45+00:00","dateModified":"2023-09-20T04:43:13+00:00","breadcrumb":{"@id":"https:\/\/www.theukrules.co.uk\/rules\/employment\/taxation\/capital-gains\/trusts\/cgt\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.theukrules.co.uk\/rules\/employment\/taxation\/capital-gains\/trusts\/cgt\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/www.theukrules.co.uk\/rules\/employment\/taxation\/capital-gains\/trusts\/cgt\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.theukrules.co.uk\/"},{"@type":"ListItem","position":2,"name":"Alphabetical List of United Kingdom Rules and Regulations","item":"https:\/\/www.theukrules.co.uk\/rules\/"},{"@type":"ListItem","position":3,"name":"Employment Rules and Regulations UK","item":"https:\/\/www.theukrules.co.uk\/rules\/employment\/"},{"@type":"ListItem","position":4,"name":"Money and Taxes Explained | UK Tax and Taxation Laws Guide","item":"https:\/\/www.theukrules.co.uk\/rules\/employment\/taxation\/"},{"@type":"ListItem","position":5,"name":"Capital Gains Tax Guide 2022 | How Chargeable Gain Works","item":"https:\/\/www.theukrules.co.uk\/rules\/employment\/taxation\/capital-gains\/"},{"@type":"ListItem","position":6,"name":"Trusts and Taxation UK Guide | Different Types of Trusts","item":"https:\/\/www.theukrules.co.uk\/rules\/employment\/taxation\/capital-gains\/trusts\/"},{"@type":"ListItem","position":7,"name":"UK Rules for Trusts and Capital Gains Tax (CGT) Explained"}]},{"@type":"WebSite","@id":"https:\/\/www.theukrules.co.uk\/#website","url":"https:\/\/www.theukrules.co.uk\/","name":"UK Rules","description":"The UK Rules","publisher":{"@id":"https:\/\/www.theukrules.co.uk\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.theukrules.co.uk\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/www.theukrules.co.uk\/#organization","name":"UK Rules","url":"https:\/\/www.theukrules.co.uk\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.theukrules.co.uk\/#\/schema\/logo\/image\/","url":"https:\/\/www.theukrules.co.uk\/wp-content\/uploads\/2023\/02\/logo-white.svg","contentUrl":"https:\/\/www.theukrules.co.uk\/wp-content\/uploads\/2023\/02\/logo-white.svg","width":191,"height":23,"caption":"UK Rules"},"image":{"@id":"https:\/\/www.theukrules.co.uk\/#\/schema\/logo\/image\/"}}]}},"_links":{"self":[{"href":"https:\/\/www.theukrules.co.uk\/wp-json\/wp\/v2\/pages\/15881"}],"collection":[{"href":"https:\/\/www.theukrules.co.uk\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/www.theukrules.co.uk\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/www.theukrules.co.uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.theukrules.co.uk\/wp-json\/wp\/v2\/comments?post=15881"}],"version-history":[{"count":8,"href":"https:\/\/www.theukrules.co.uk\/wp-json\/wp\/v2\/pages\/15881\/revisions"}],"predecessor-version":[{"id":25507,"href":"https:\/\/www.theukrules.co.uk\/wp-json\/wp\/v2\/pages\/15881\/revisions\/25507"}],"up":[{"embeddable":true,"href":"https:\/\/www.theukrules.co.uk\/wp-json\/wp\/v2\/pages\/16607"}],"wp:attachment":[{"href":"https:\/\/www.theukrules.co.uk\/wp-json\/wp\/v2\/media?parent=15881"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}