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Taxation of trusts ― introduction


Produced by a Tolley Trusts and Inheritance Tax expert
Trusts and Inheritance Tax
Guidance
tag-icon Autumn Budget 2024

Taxation of trusts ― introduction


Produced by a Tolley Trusts and Inheritance Tax expert
Trusts and Inheritance Tax
Guidance
tag-icon Autumn Budget 2024
imgtext

This guidance note explains the different interests that a beneficiary can have in a trust and gives an overview of the inheritance tax, income tax and capital gains tax treatment of trusts. In each case it links out to more detailed guidance notes which cover the different tax treatments in detail.

Introduction

The taxation of trusts is based on the personal tax regime. Trusts are subject to the same taxes as individuals: income tax, capital gains tax and inheritance tax. However, the application of those taxes varies according to the status and terms of the trust. The determining factor is most commonly the entitlement of the beneficiaries. Other relevant factors are the date of commencement of the trust, the age of the beneficiaries and whether it was created during lifetime or on death. Therefore, the first step in working out how a trust is to be taxed is to examine the trust document to ascertain these details.

Beneficiaries’ entitlement

Trust property is legally held by trustees but for the benefit of

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  • 26 Mar 2025 05:20

Home/ Tolley Tax Guidance/ Trusts and Inheritance Tax / Advising on trusts — IHT

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