LITRG response to HMRC Taxation of Trusts consultation
Released 26 February 2019
The Low Incomes Tax Reform Group (LITRG) has responded to HMRC’s Taxation of Trusts consultation.
The consultation issued by HMRC on 7 November 2018: The Taxation of Trusts: a Review, set out the principles for taxing trusts and requested views and evidence on reform in line with them. The LITRG response highlights that it is aware that many ordinary people are the beneficiaries of trusts over their lifetime and recommends that the taxation of both trusts and estates in administration are simplified to help those on low incomes or who are otherwise vulnerable. The LITRG also suggests the following:
•That where trust income is distributed it should be taxed on the beneficiary, not on the trustee;
•That consideration be given to changing the tax regime affecting personal injury trusts, as these are likely to be created at a time when an individual is vulnerable;
•That a root and branch review of the desired uses of trusts for the disabled be undertaken and that legislation is drafted to ensure the best outcome for the disabled beneficiary.
View the submission at The Taxation of Trusts: A Review.