More good news from the HMRC
Until now, bare trusts were charged tax based upon the settlor or trustee. However, HMRC has now changed its mind about the interpretation of its own rules.
The result of this is that the benefits from bare trusts can now be taxed upon the beneficiaries, rather than the settlor or trustee. These new rules will apply to grandparents and other non-parental friends and relatives. This means that the trust can benefit from the annual allowance of the beneficiary, rather than increase the tax of the trustee or settlor, something that seemed very unfair when the money was being used for someone else.
Through some careful planning, this can significantly reduce the taxation of trusts where the beneficiaries have not used their own personal allowances.
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