Trustee Investments

Trustee Investment – Help for Trustees

It often used to be the case that to avoid tax one simply tucked assets away in trust. Sadly for trustees the government has woken up to this in recent years and there has been a succession of changes resulting in the relatively high rates of tax shown below.

For 2019/20 trustees of Accumulation and Discretionary Trusts will pay tax on income at the following rates:-

Type of income Tax rate – 2020 / 2021 
Dividend-type income 38.1%
Interest Distributions 45%

A lower rate of 7.5% and 20% respectively applies to the first £1,000 gross of trust income.

Trustees do not qualify for the dividend allowance – meaning 100% of dividend income is taxable.

Dividends will be received without any attaching tax credit to set against their liability.

If the settlor has created more than one settlement, the £1,000 will be split equally between each, subject to a minimum of £200 per trust.

This means that trustees should focus their investments on so–called “non income producing assets”. Conveniently, but perhaps confusingly,  such assets can produce tax-efficient “income” and often provide capital growth… Contact us

Trustees must have a written investment strategy and review the performance of their investments on a regular basis. Under the Trustee Investment Act 2000 they are also required to take professional, independent, investment advice.

Talis are expert in advising trustees, settlors and beneficiaries.

Past performance is no guarantees of future returns but if the trustees do not do their best to invest trust monies effectively they could face the wrath of the beneficiaries.

see also

Wealth Management

Investment Advice

Inheritance Tax IHT Advice London

Estate Planning

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