Gilts in discretionary trust

We are looking at investing in some gilts and know that capital gains on gilts for individuals are tax-free but we are unsure on the tax treatment on gains if held within a discretionary trust.

Section 115 of the Taxation of Chargeable Gains Act 1992 confirms gilts are tax free.
But for corporate investors gilt gains are taxable as they get caught under ‘loan relationship legislation’.

On the DMO site they word it that gilt gains for INDIVIDUAL INVESTORS are exempt which for me casts doubt on whether trusts are treated as entities or individuals?

Can anyone clarify the tax situation for gilts in trust please?

TCGA s.115 refers to disposals ‘… by any person…’

A ‘body’ of trustees is a person.

CG54900 states;

‘Since 2 July 1986 all disposals of gilt-edged securities have been exempt from Capital Gains Tax, TCGA92/S115 (1)(a).’


For corporation tax purposes gains and losses on loan relationships are dealt with as if they were income. This overrides the CGT exemption, which only comes into play where something is not taxable as income.

However corporation tax is not payable by trusts and there is nothing in the income tax legislation to tax gains on securites held as an investment as income. Accordingly, gains of a trust potentially fall into the CGT regime, where they are exempted by s 115.