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Mark McLaughlin reviews Trust Taxation and Private Client Tax Planning (5th Edition), by Emma Chamberlain OBE, with Matthew Harrison and Richard Wallington.

Introduction

Prior to my retirement as a tax consultant in 2021 to concentrate on my career as a tax author and editor, one of the most useful and well-thumbed books in my tax library for many years was Trust Taxation and Private Client Tax Planning (or Trust Taxation and Estate Planning, as it was then named). It was a frequently referenced research resource, which I valued very highly.

The fourth edition of Trust Taxation and Private Client Tax Planning was published in 2014, with a ‘law stated at’ date of 10 March 2014. Quite a lot has happened since then in the tax world, to say the least! So, a new edition of this work will be particularly welcomed by those trust and private client tax practitioners familiar with earlier editions.

Sadly, since the last edition, one of the two original authors, Chris Whitehouse, passed away. Chris was a renowned and distinguished barrister and private client tax practitioner, whose writing style made complex areas of tax easy to understand. His co-author from the previous edition, Emma Chamberlain (since awarded an OBE for “services to Government Tax Policy” in recognition of her contribution to numerous important and complex tax reforms) is joined for the new edition of Trust Taxation and Private Client Tax Planning by Matthew Harrison and Richard Wallington as co-authors.

Contents

It is perhaps a good indication of how increasingly difficult and complicated the tax world has become that the fifth edition of Trust Taxation and Private Client Tax Planning has expanded to two volumes, comprising ten parts, 72 chapters, and two appendices; a total of 1,653 pages. It is also a reflection of the current state of tax law in the UK that despite the page count, this work only covers private client tax.   

Unsurprisingly for a work that was last updated more than ten years ago, there has been a rewrite of most chapters, including excluded property trusts, insurance schemes, residence, domicile, the taxation of UK real estate, stamp duty land tax (SDLT) and inheritance tax (IHT) and capital gains tax (CGT) planning chapters. This edition also features new chapters on the trusts register, disclosure of tax avoidance schemes (DOTAS) and the general anti-abuse rule (GAAR). There are also new chapters on family investment companies and deferred share schemes, together with a new chapter on EU law and the post-Brexit situation.

The ‘law stated at’ date is (“more or less”, according to the Preface) December 2023. However, the first 19 pages are an introductory note by Emma Chamberlain on the changes announced in the March 2024 Budget in respect of foreign domiciliaries and non-resident trusts. Of course, since that Budget a general election has taken place, resulting in a change of government. The new government published a policy paper in July 2024, setting out the changes being made to the taxation of non-UK domiciled individuals from April 2025. The government will be implementing a four-year foreign income and gains regime announced by the previous government at Spring Budget 2024, so Emma’s introductory overview of the change from a domicile-based tax regime to a residence-based system still offers some useful context to the forthcoming changes. However, not all the original proposals are to be implemented. Such a fundamental change will presumably result in a prompt sixth edition of Trust Taxation and Private Client Tax Planning, or possibly a supplement to the fifth edition – only time will tell.

As indicated, the Chapters are grouped and allocated into Parts.

Volume I of Trust Taxation and Private Client Tax Planning consists of Parts I to V.

• Part I is an introductory section, with chapters which consider: the trust; categorisation of foreign entities; and EU considerations for private clients
• Part II considers residence and domicile issues and covers the rules governing the residence of an individual for UK tax purposes both before and after the introduction of the statutory residence test (SRT) from 6 April 2013 (the content of the latter having been expanded significantly since the fourth edition). It also deals with:
  • Domicile and the residence status of –
  • Trustees
  • Personal representatives and
  • Companies
  • A further chapter examines the UK tax consequences of non-UK residence and foreign domicile for individuals
• Part III is concerned with income tax as it applies to trusts, including UK resident and non-UK resident settlor-interested trusts
• Part IV deals with CGT. It covers considerable ground, including (but not limited to) the various CGT reliefs available to trustees and individuals e.g.:
• Business Asset Disposal Relief
• Gift hold-over relief,
• CGT regime for non-UK resident trusts, and
• Loss relief provisions for trusts and trustees
• Part V deals with IHT; aspects covered include:
  • Gifts With Reservation of Benefit
  • Pre-Owned Assets income tax charge (POAT)
  • IHT treatment of qualifying and non-qualifying interests in possession
  • Taxation of relevant property settlements, excluded property and foreign domiciliaries, and liabilities       

Volume II of Trust Taxation and Private Client Tax Planning consists of Parts VI to X.

• Part VI looks at a number of specialist topics in some detail. The chapters cover subjects including:
  • Trusts for minors and older children
  • Trusts for the disabled and vulnerable beneficiaries
  • Will drafting
  • Deeds of variation
  • Personal representatives, and
  • Bare trusts
• Part VII subjects include:
  • The family home for IHT and POAT purposes
  • CGT main residence relief
  • SDLT, and
  • General overview of tax planning
• Part VIII considers business structures, and deals with subjects including:
  • Business Property Relief
  • Farms and Agricultural Property Relief
  • Partnership structures, and
  • Companies (including non-resident companies and family investment companies)
• Part IX concerns life policies and other insurance policies held in trust, and pension arrangements
• Part X deals with compliance and reporting issues, including
  • DOTAS
  • GAAR and
  • The Trusts Register   

Appendix I contains numerous precedents for intervivos settlements, will trusts and variations, and subsidiary documents. Appendix II reproduces communications and correspondence involving HMRC and professional bodies.

Tax practitioners these days need to be adaptable and potentially multi-disciplinary in terms of covering multiple taxes when giving advice to their clients. Thankfully, Trust Taxation and Private Client Tax Planning covers plenty of ground. Of course, some chapters will be more frequently referenced than others, depending on the practitioner’s particular area of interest and expertise. My own favourite chapters were always those dealing with IHT and POAT. However, there is something for everyone involved in trust and private client work.

The Verdict

For the reasons explained at the start of this review, I had very high expectations of this new edition of Trust Taxation and Private Client Tax Planning. I was not disappointed. The scope of the content in the context of trust and private client tax planning is wide ranging, yet sufficiently detailed. The technical level of the commentary is very high, and is written in an assured, scholarly but easy-to-follow style that is east to comprehend and digest, with an emphasis on the practical, day-to-day work of the experienced trust and private client tax practitioner. The well-written commentary is punctuated with numerous worked examples to assist the reader’s comprehension of the subjects covered.

Trust Taxation and Private Client Tax Planning was an essential part of my own tax library as a tax consultant, from its very first edition. As a research resource, it was one of my key ‘go to’ guidance materials. The authors are to be congratulated for continuing the pattern of previous editions and on the mammoth task of producing an updated, expanded new edition whilst maintaining its exceptionally high standards.

Overall, Trust Taxation and Private Client Tax Planning comes highly recommended.      

Cost and to Order

Trust Taxation and Private Client Tax Planning (5th Edition) is available in print (cost £295), or as an eBook on Thomson Reuters ProView (cost £295), or both (cost £383.50).

It can be ordered from Sweet & Maxwell online: www.sweetandmaxwell.co.uk/Product/Private-Client/Trust-Taxation-and-Private-Client-Tax-Planning/Hardback-and-eBook-ProView/30804949