CGT on disposal of house in Trust

[worden]

Hi there

f someone could clarify. trying to get my head round CGT charges on winding up property held in Trust.

If property is distributed to beneficiaries in the Trust and hold over relief is applied for 260 TCGA .

Does this mean that on ULTIMATE disposal (SALE) of house buy beneficiaries that CGT will be payable at 18% as opposed to the Trust rate of 28% ??

and is the CGT on the increase in value from the amount the property was worth when went into the Trust , or when the beneficiaries received on Trusts disposal. ?

Thank you very much !

[AGoodman]

1. Beneficiaries will pay the tax at the personal rate which is 18% (basic) / 28% (higher). Which they pay (and it could be a mix) will depend on their other income and gains.
2. Yes, the point of holdover relief is that the beneficiaries inherit the trustees' base cost (ie the value when the trustees' acquired it). If there was holdover on the way into the trust, it could go back further.

[AGoodman]

nb. could also be IHT and/or an obligation to file an IHT return

[worden]

thank you Goodman for your kind reply.

would you mind also clarifying . If the house is not sold immediately Are there any CGT savings in distributing now, as opposed to only distributing when intending to sell ? or would it be the same ?

thank you

[AGoodman]

CGT: no - you just take the small risk that holdover relief could be abolished in the meantime.

Also: if not already, you will have to register the trust with HMRC until the new rules and you presumably run the risk of an IHT 10 year anniversary and/or larger exit charge.

[worden]

thank you very helpful 1

[AGoodman]

That should be "under" the new rules, not until the new rules.