As published on accountancytoday.co.uk, Tuesday 30 March, 2021.
The Chartered Institute of Taxation (CIOT) is pushing for specific reforms on the taxation of trusts, following the government’s failure to undergo a wholesale review of this area.
Last week, the government published its responses to ‘The taxation of trusts: a review’ consultation, but did not indicate any future action will be taken to reform trusts going forward.
The tax body is calling for the government to address the complex regime for disabled trust beneficiaries and families, and the disincentives for administering trusts set up by foreigners to the country.
Emma Chamberlain OBE, joint chair of the CIOT’s Private Client (International) Committee, said: “The current tax regime for trusts for disabled persons is unnecessarily complex and provides inconsistent relief between the taxes to disabled beneficiaries. Trustees of disabled beneficiaries are necessarily much more closely involved in the financial day-to-day circumstances of disabled beneficiaries as they are often parents or friends.
“Therefore, a simple transparent structure that is consistent across all taxes would be much better suited to this type of trust. We would like the government to look at a new bespoke, transparent regime for disabled persons’ trusts together, with simple precedent forms available online to use when setting up such a trust.”
She added: “A second area where reform would be sensible is the removal of the significant UK tax disincentives to someone living abroad who wishes to establish a trust in the UK.
“Enabling foreign settlors to set up trusts in the UK – provided one or more of the trustees is a UK professionally regulated trustee – would bring benefits in terms of transparency because the trust would be required to be registered on the Trusts Register here.”