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.