Sale of land within trust and capital gains tax

Seeking advice on how to formally value land that was entered into a discretionary trust in 1995 and sold in 2021, inclusive if what capital gains tax will be payable on receipt of cash from sale.

Many thanks.
Marc Jackson

From what you say it would appear that the land was not valued at the date when the trust was set up and presumably therefore an IHT return, possibly an IHT 100, was not submitted. If that is the case, then you may have problems depending upon the value of the land in 1995. Penalties and interest could follow. They first step therefore is to get a chartered surveyors valuation and depending upon its value and whether in 1995 there was a threshold under which you did not need to make a return (I can’t remember if, there was such a threshold at that time, you will have to research the matter), You will need to submit the IHT 100 and supplementary account and hope for the best. Clearly there will be a substantial gain on the sale of the property and the trustees will have to pay the trust rate of tax. Best of luck!

Patrick Moroney

Bwl solicitors

Did the settlor include the transaction on their 1995 tax return, either to account for any CGT or to make a holdover election? If so that may give you a starting point for the base cost. Depending on when in 1995 the trust was created the IHT threshold was either 150k or 154k which may give you an idea of whether or not any IHT should have been accounted for on settlement and on subsequent 10 year anniversaries. Is/was the land agricultural or development since this may have an effect on its value and you may need a specialist valuer rather than a general practice MRICS. As this does not appear to be UK residential property than you should not be subject to the 30 day reporting regime, but if not already registered on the Trust Register, the trustees will need to register and obtain a UTR and submit a self-assessment tax return SA900 to report the gain and pay any tax arising by 31 January following the end of the tax year in which the sale took place. A discretionary trust pays CGT at 28%. Trusts generally get half the annual CGT exemption unless the settlor created other trusts after 1974, when it is apportioned between them.
Citroen Wells