HMRC continue to assert that bare trusts will not be taxable because tax on income and gains is the beneficiaries’ liability. - see TRSM 70030, which says ‘Bare trusts are not required to register for taxable purposes, because any UK tax liability is incurred by the beneficiaries rather than the trustees.’
While that is so, it doesn’t go far enough. SDLT (and the Scottish and Welsh equivalents) on the grant of a lease is charged on the trustees of a bare trust, not the beneficiaries.
Perhaps I should take this opportunity to quote the SDLT legislation. It is in Paragraph 8 Schedule 16 Finance Act 2003
‘(1) Subject to sub-paragraph (2), where a person acquires a chargeable interest or an interest in a partnership as bare trustee, this Part applies as if the interest were vested in, and the acts of the trustee in relation to it were the acts of, the person or persons for whom he is the trustee.
(2) Sub-paragraph (1) does not apply in relation to the grant of a lease.
(3) Where a lease is granted to a person as bare trustee, he is treated for the purposes of this Part, as it applies in relation to the grant of the lease, as purchaser of the whole of the interest acquired.
(4) Where a lease is granted by a person as bare trustee, he is to be treated for the purposes of this Part, as it applies in relation to the grant of the lease, as vendor of the whole of the interest disposed of.’