If two trust merge and both trusts have a
CGT allowance of £1230 what is the merged trusts CGT allowance?
Income Tax allowance of £200 what is the merged trusts income tax allowance?
Is it just a simple sum of the two trusts allowance before merger.
But if thats true a settlor could create a number of trusts merge them into one easier to addminister trust but end up with higher allowances than
a settlor that creates only one trust from the outset unless legistion prevents this.
I assume by merger you mean that the assets of one settlement are transferred to the other, bring the first to an end.
You just apply the usual rules, albeit there would now be one less settlement. If there are still 5 or more, the exemption for the surviving settlement would still (for 2022/23) be £1,230. If now 4, it would be £6,150 / 4 = £1,537 (not sure if you round up to £1,538).
Thank you Andrew
Simplier than i thinking might be the case the income tax and cgt allowances on trust coming to an end on transfer to another settlement
TCGA 1992, schedule 1A sets out the criteria for the annual CGT exemption.
For income tax, this is abolished for the current tax year (2023/2024) et seq, which will simplify matters (although is it also yet another stealth tax on trusts?)
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
These reductions or abolition of the thresholds not only drag in more taxpayers at lower levels they increase the administrative burden for HMRC who have demonstrated that they can’t cope now.
I was think of the trust cgt allowance if there are multiple trusts its never divided by more than 5
In error I was refering to the first £1000 of trust income that pays income tax at lower rate as an allowance as like cgt trust allowance the £1000 is never divided by more than 5 for multiplet trusts