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Consultation on the taxation of trusts

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HMRC is consulting on a review of the government’s principles for taxing trusts, seeking views on the extent to which the current system meets those principles and possible areas for reform.

The government announced at Autumn Budget 2017 its intention to consult on how to make the taxation of trusts simpler, fairer, and more transparent.

The consultation does not contain specific proposals for reform, but sets out nine broad questions on which views are invited. These questions are based around HMRC’s examination of:

  • existing trust usage within the UK, and proposed policy principles of transparency, fairness and simplicity that should underpin trust taxation;
  • the principle of transparency in relation to non-resident trusts, touching on the common reporting standard and the trusts registration service, and asking whether further measures are required to tackle avoidance and evasion;
  • the principle of fairness in ensuring that trusts do not offer either a tax advantage or disadvantage, describing potential issues with the interaction between IHT and trusts, and aspects of income tax and CGT treatment; and
  • the principle of simplicity, particularly in relation to vulnerable beneficiary trusts.

Responses should be sent by 30 January 2019. See