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Corporate Services Blog

Taxation of Vulnerable Beneficiaries of Trusts

02/01/2015

Vulnerable Beneficiary Trust’s apply to persons who are either physically disabled, mentally disabled or a child whose parents are deceased.  These qualify for special income tax, capital gains tax and inheritance tax treatment and protect the beneficiaries so that their means tested benefits are not affected.

The Finance Bill of 2014 is to ease taxation further for disabled beneficiaries.  The objective being that property within a Trust will not be taxed any more adversely than if it were owned by the individuals themselves.

Some of the changes proposed by the Finance Act 2014 include;

- By definition a disabled person will now include individuals who are in receipt of Personal Independence Payment, which was introduced to replace the Disability Living Allowance for persons aged 16 to 64.  
- Property within the trust will not be subject to inheritance tax, but instead will be treated as part of the beneficiary’s estate.  
- The Capital Gains Tax ‘uplift’ provisions will now be extended to include disabled beneficiaries where the beneficiary has no entitlement to the income of the trust

As with a vast majority of Trusts the establishment of a Vulnerable Beneficiary Trust is complex and this need to be drawn up carefully to avoid substantial liabilities.

Chesterfield are highly experienced in the area of Trusts and whether this is for Vulnerable Beneficiary’s or any of a wide variety of other reasons for considering establishment of a Trust Chesterfield are on hand to offer advice and assistance.

For more information on setting up Trusts please do not hesitate to contact us by following the link below or call us on our offices 
 



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