CIOT responds to Taxation of Trusts consultation

Released 07 March 2019

The Chartered Institute of Taxation (CIOT) has published its response to HMRC’s taxation of trusts consultation.

HMRC’s consultation The taxation of trusts: a review (which ran from 7 November 2018 to 28 February 2019) set out the principles for taxing trusts and sought views and evidence on reform in line with them. The CIOT response comments that the four principles set out by Government to underpin the taxation of trusts: transparency, fairness, neutrality and simplicity are uncontroversial. However, the UK's current approach to defining the territorial scope of trusts for tax purposes particularly for corporate trustees and the provision of professional trustee services in the UK is both complex and lacking in neutrality. The CIOT considers that targeted reform to the inheritance tax regime as it applies to trusts should be considered as the level of complexity within the current trust taxation does not seem justified by its very low yield. The CIOT also suggests abolishing any special regime for children’s trusts which would also make tailored and specific reform for disabled trusts easier to achieve if the taxation of trusts for children under 25 was not merged with the taxation of disabled trusts (which cover a very different constituency).

View the submission at The Taxation of Trusts: A Review - CIOT comments.

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