CGT on beneficiaries of a Trust

[worden]

Hi there

Can i please ask what the CGT as a percentage is on a house that has been placed in a Trust if

1: the Trust pays the tax

2: the beneficiaries pay the tax after a deed of appropriation. Some beneficiaries higher rate and some base rate .

Is it 24% in all cases ? though using method 2 allows for the individual allowance.

many thanks for any help

[AGoodman]

I have to make a few assumptions here:

1. This is a "proper" trust - i.e. an established will trust or a trust established by a living settlor. It is not an estate under administration.
2. PPR is not available because no beneficiaries live in the property.
3. The beneficiaries are not currently absolutely entitled to the property.

If the trustees sell the property, they pay 24% CGT
If the trustees distribute the property to the beneficiaries, this is itself a deemed disposal at market value (so the trustees would incur CGT at 24%).
However, if the trust fund is "relevant property" then the trustees and beneficiaries can jointly claim holdover relief under s.260 TCGA so that the beneficiaries receive the property with the trustees' original acquisition value. The beneficiaries can then sell at their marginal rates of CGT.

Most trusts are "relevant property" trusts save for (a) life interest trusts established prior to 2006 and (b) life interest trusts established by will or under an intestacy. There are a few other minor exceptions. Note that a distribution from a relevant property trust may incur an IHT exit charge.

[worden]

Thank you Goodman ! very helpful as always !