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Where Taxpayers and Advisers Meet

Settlor Interest Trust - CGT

marc02
Posts:94
Joined:Wed Apr 22, 2009 2:46 pm
Settlor Interest Trust - CGT

Postby marc02 » Wed Nov 30, 2016 11:36 am

Hi,

The Settlor places their home into a Settlor Interest Trust, and continues to live in that home. After the Settlor is deceased, the Trustees decide to sell the home, when is CGT due?

The Settlor lives in the home and so it is a GWR.

I've read that the Settlor is effectively a life tenant, and so on the Settlors death the Trust immediately acquires the property but there is no CGT at that point because s73 excludes a charge when the gain arises on death.

Therefore is the CGT payable calculated on the gain between the Settlors Death and Trustee's Sale? Or is it calculated on the gain between entry of the property into Trust and Sale?

Thanks.

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Settlor Interest Trust - CGT

Postby maths » Wed Nov 30, 2016 8:48 pm

If on the death of the settlor the trust terminates then at that time there is a deemed disposal and reacquisition at market value by the trustees of the trust property but no CGT charge arises on any deemed gain.

On termination one of the trust beneficiaries acquires the property at market value and thus it is such beneficiary (not trustees) that is subject to CGT on a future disposal.

If the trust does not terminate then there is no disposal and reacquisition by the trustees. The trustees simply continue to hold the assets albeit at their original base cost (ie cost at date trustees acquired the asset).


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