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Trusts are liable to income tax and CGT on income and gains for each tax year. The trustees are responsible for filing self
assessment tax returns by the normal date (31 January 2005 for 2003/04) and paying the tax on the normal dates (payments on
account of income tax on 31 January and 31 July 2004, and the balance of income tax and the whole of the CGT on 31 January 2005).
The tax rates applicable to trusts are:
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Life interest |
Discretionary |
| Rate on general income (profit, rent) |
22% |
34% |
| Rate on savings income (interest) |
20% |
34% |
| Rate on dividend income |
10% |
25% |
| Rate on capital gains |
34% |
34% |
| CGT annual exemption |
£3,950 |
£3,950 |
The CGT annual exemption is divided between trusts established by the same settlor since 1978, to a minimum of £790.
Trusts are also liable to pay inheritance tax in a variety of circumstances, and trustees should make sure that they have
appropriate professional advice to enable them to fulfil all their legal and fiscal responsibilities.
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