Trusts

Question 1

Name 4 relevant property trusts

Answer 1

Discretionary, life interest, interest in possession and A&M

Question 2

What is a relevant property trust

Answer 2

Discretionary and IIP that are flexible, created during lifetime (post 22/03/06) not within specific exceptions - Entry, Exit and Periodic charge

Question 3

What are the exceptions for RPT

Answer 3

IIP pre 22/03/06 , terms of an IPDI trust, disabled person, bereaved minor or 18-25 trust

Question 4

Explain what Pre 22/03/06 IIP trust

Answer 4

Treated as bare trusts (PETS)

Question 5

When must trustees complete self assessments

Answer 5

31/01 in year of assessment and by 31/07 of the following year - based on previous years income with final balance 31/01
CGT - 31/01 in following year

Question 6

When can offshore trusts be liable to UK tax?

Answer 6

UK resident trustee
Trust set up prior to settlor becoming DD in UK (as long as spouse or children receive no benefit from trust)

Question 7

How do you qualify for Vulnerable persons trust (5)

Answer 7

receive one of the following
attendants allowance
disability living allowance
personal independence payment
Constant attendance allowance
armed forces independence payment

Question 8

What trust are for relevant minors

Answer 8

statutory as result of intestacy
trust establish under will
trust establish under criminal injurie’s compensation scheme

Question 9

when must a VP trust be registered for favourable treatment

Answer 9

Trustees must elect not more than 12 months after 31/01 following end of the tax year the trust became effective

Question 10

How can you revoke a VP trust

Answer 10

Person ceases to be a VP
Trust ceases to be qualifying
Trust terminated

Question 11

What is the tax on Trustees for an IIP Trust

Answer 11

20% savings income (no personal allowance)
8.75% dividends (no dividend allowance)
20% Other income
20BRT Tax credit for beneficiary

Question 12

what is the order trust expenses are set against income pre distribution
(Life interest and IIP Trust)

Answer 12

dividends
foreign dividends
savings income
other income

Question 13

Explain how beneficiary / trustes declare tax
(Life interest and IIP Trust)

Answer 13

R185
20% BRT tax credit
additional tax due for HRT/ART

Question 14

Explain how trustee expenses are calc/paid
(Life interest and IIP Trust)

Answer 14

Gross income
calculate tax on each type of income
Gross up expenses
Deduct from gross income (D/S/Other) order
Deduct net income from amended gross income (above) to get the tax credit

Question 15

How are dividends taxed
(Life interest and IIP Trust)

Answer 15

8.75%
no div allowance
HRT/ART must pay extra
Can pay direct to beneficiary and would be taxed as normal dividend income

Question 16

Explain tax on Discretionary and A&M trusts

Answer 16

£1,000 standard rate band (divided by number of trust min £200) - 8.75% or 20%
Anything over 45% or 39.35% for divs
SRT is applied to NS, S and Divs

Question 17

How are expenses dealt with under D & AM trusts

Answer 17

Grossed up by the appropriate rate for income
8.75% div
20% savings
20% other income