Streamlining taxation for trusts and estates: what you need to know

Posted 23 May 2023 by Neil MacGillivray

In the Spring Budget Jeremy Hunt announced tax changes to simplify the administration of trusts and estates.

At the moment, for accumulation and discretionary trusts, the trust rate (45%) and dividend trust rate (39.35%) of tax doesn’t apply to the first £1,000 slice of income for a tax year. Instead the basic rate of 20% and basic dividend rate of 8.75% apply.

However, from 6 April 2024, the £1,000 standard rate band for trusts will be removed, as will the concession where the tax liability is below £100. In its place legislation will be introduced so that where trusts and estates have income of up to £500 or less, they’ll not pay income tax.

Although the changes are minor – and it’s debatable whether they will truly simplify – they’re expected to affect an estimated 37,000 people each year who are beneficiaries of trusts or estates.

To help you navigate related conversations with your clients, our latest Tech Talk covers:

  • The current tax position
  • The changes planned and when they’ll begin
  • Who will be impacted

Take a look at the guide here.

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Neil MacGillivray

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Neil MacGillivray