Trusts - Kirk Rice

Specialist Trust Tax Advisors

If you want to gift assets whilst retaining control over them, a trust might be an option for you. However, trusts can be complex, and you may benefit from specialist tax advice.

Trusts can involve capital gains tax, inheritance tax, income tax, and Stamp Duty Land Tax (SDLT). The tax treatment depends on the type of trust and the assets involved.

Trusts Tax Advice covers the tax implications for both the donor and the trust itself. This can include:

Capital gains tax on gifts into trust

Lifetime inheritance tax where the value exceeds the nil-rate band

Stamp Duty considerations where property is transferred

Income tax on rental profits

Capital gains tax on disposals

Inheritance tax charges

Kirk Rice’s specialist Trust Tax Advisors can help you understand the type of trust involved, the applicable tax rates, and any available reliefs. We can also explain how the trust rate may apply to income and how inheritance tax may arise on capital distributions. If you would like to speak to us about Trusts Tax advice, please contact info@kirkrice.co.uk.

Are trusts difficult to set up and what are the tax implications for the donor?

Trusts aren’t difficult to set up. First the property’s trustees and beneficiaries need to be agreed. Then a trust deed can be written up. (Solicitors are usually involved in the drafting of the trust deed.)

Capital gains tax must be paid on the sale of some of the assets (which includes a disposal by way of gift). So, any assets that have been held for a while, and have grown in value, need to be considered carefully before they are gifted to a trust.

Depending on the asset though, there are various reliefs available to reduce or mitigate your capital gains tax liability.

If the value of a gift to a trust is greater than the nil-rate band (£325,000) then it’s possible you might have to pay lifetime inheritance. The lifetime inheritance tax rate is 20%.

Stamp Duty Land Tax (SDLT) isn’t usually payable on a transfer or gift of a property into a trust. However, if there is a mortgage outstanding on the property SDLT will be chargeable on the consideration (e.g. the value of the mortgage).

What are the tax implications for a trust?

This depends on the type of trust. However, in many ways the tax regime for a trust is similar to individuals – although the rates can differ. For example, any profits that a trust makes from renting a property will be subject to income tax. A trust will generally have the trust rate applied to this income at 45%. However, some types of trust have a 20% tax rate applied.

If a trust disposes of an asset, then capital gains tax will apply. For example, 24% on disposal of a property, 20% on other assets.

One particular type of trust, known as a discretionary trust, will also need to take account of a ten-year anniversary charge. This is an inheritance tax liability charged on the value of the trust’s assets at the anniversary date.

Inheritance tax may also be due on capital distributions from the trust, particularly when the trust is wound up.

If you would like to speak to us about trusts, get in touch via info@kirkrice.co.uk

What is a trust?

A trust is created when property is gifted to trustees who then hold that property on behalf of the beneficiary. Unlike a normal gift, a trust allows the donor to retain some degree of control over the asset. The beneficiary does not have absolute control of the gifted property.

What are the tax implications for the donor of a trust?

What tax applies to a trust?

Our Team

Meet our accountancy and tax experts.

Richard joined Kirk Rice in 2024 having spent 15 years as a tax partner at Rice Associates. He advises clients from individual business owners to large corporate clients. Outside of work he enjoys outdoor life including running, cycling, and swimming plus spending time with his family. Richard Somerville Partner - Tax Thames Valley
Jane joined Kirk Rice in September 2023 to work as a Senior Manager in the personal tax team. She is a qualified Chartered Tax advisor with over 25 years of experience in personal tax. Jane has a particular expertise in international, cross-border, personal and employee tax issues. She spends her spare time with her family, gardening and running. Jane Page Senior Manager - Tax Thames Valley

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Frequently asked questions

What is a trust?

What are the tax implications for the donor of a trust?

What tax applies to a trust?

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