In the wake of a new tax year, we have compiled a summary of the changes that are coming in for trusts and estates from 6 April 2024.
Broadly a simplification to the taxation of trusts and estates, which will apply to all trusts and estates, however, they will be of particular interest to those who fall into the government’s definition of ‘low-income trusts and estates’.
Low-Income Exemption
There will no longer be a reporting exemption for trusts and estates with only savings income with a tax charge of £100 or less. Rather this will be replaced with a £500 limit that includes all income. Where a trust or estate has income of £501 or more, the entire amount will be taxable and not just the excess. This means that no R185 will be issued for beneficiaries to claim a tax credit where trust and estate income is less than £500, as there would have been no tax suffered by the trust or estate. There are special considerations required where a settlor has created multiple trusts.
Standard Rate Band Removal
Additionally, there is now no longer a reduced rate of tax paid on the first £1,000 of income and all income (subject to being above the new £500 limit) will be taxable at the rates applicable to trusts of 45% for non-savings income and 39.35% on dividend income.
Capital Gains Tax Annual Exemption
The Capital Gains Tax annual exempt amount for trusts has once again reduced, this time to £1,500 from 6 April 2024, where it too is expected to remain fixed.
If you would like to find out how any of the above may affect you in further detail, please get in touch on 01242 776000 or tax@randall-payne.co.uk.
