We were engaged by two brothers who were beneficiaries of several UK property-holding trusts. They wanted to understand the financial and tax implications of selling the properties held within the trusts and distributing the proceeds. They wanted to make informed decisions, reduce tax exposure, and take advantage of planning opportunities.
The properties were held in three settlements, two discretionary trusts and one interest-in-possession trust . All trusts pre-dated the relevant property regime introduced in 2006. Our clients wished to assess the implications of either selling the properties within the trusts or transferring them to themselves as beneficiaries before sale.
We delivered a full comparative analysis of each trust and its tax position taking into account the changes in legislation. By modelling both sale and transfer options, we identified a clear advantage in certain trusts, appointing properties to the beneficiaries before sale allowed them to use personal CGT exemptions and reduce overall tax.
We clarified the income tax treatment of each trust and highlighted key compliance obligations, including the 60-day CGT reporting requirement. Importantly, we advised on how each course of action would impact the clients’ IHT exposure – and how proactive planning (e.g. gifting proceeds, using personal investment companies, or creating new trusts) could reduce estate values over time.
Our clients were able to proceed with confidence, supported by tailored tax advice to help them make a decision. For prospective clients in similar situations, this case illustrates how strategic advice can not only reduce immediate tax liabilities but also unlock long-term planning opportunities – ensuring wealth is protected and passed on efficiently.
Optimized by Seraphinite Accelerator
