CGT on Trust Property for charitable beneficiaries

Client wishes to set up a charitable discretionary settlement for the benefit of a list of UK charities.
He wishes to know whether if real property is transferred into the trust, any CGT resulting from a gain on future sale can be recouped by the charities in the same way as Income Tax.

Balkrishna Patel
Stennett & Stennett

If the discretionary trust is exclusively charitable, then no CGT charge should normally arise on a future sale of the property – ss.256/7 Taxation of Chargeable Gains Act 1992 – so nothing for the charities to “recoup”.

Paul Saunders

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Provided the trust will be for general charitable purposes and there are no other types of beneficiaries then the trust will be exempt from CGT as it is for Income Tax and IHT.

Where there is any non-charitable expenditure then the trustees should double check the position because there are restrictions on the usual tax reliefs available to charities in these circumstances.

I hope this is helpful.

Jacqui Lazare
Withy King LLP