Accumulation period Definition

GLOSSARY

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What does Accumulation period mean?

The period of time during which the trustees can accumulate trust income by adding it to the trust capital instead of paying it out to the beneficiaries. The rule against excessive accumulations dictated that trustees could not accumulate income beyond one of six permitted accumulation periods. This is now abolished as a result of the Perpetuities and Accumulations Act 2009 (PAA 2009) in relation to trusts which are created on or after 6 April 2010, except for charitable trusts. As regards private trusts it is permissible for settlors to choose to impose their own restrictions should they so wish.

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Types of SIP awards

Types of SIP awards FORTHCOMING CHANGE: Following its announcement as part of the Spring Budget on 15 March 2023, HMRC published a call for evidence on how to improve and simplify non-discretionary tax-advantaged Save As You Earn (SAYE) and Share Incentive Plan (SIP) schemes on 5 June 2023. The call for evidence focused on the effectiveness and suitability of SAYE and SIP, participation levels in the schemes, their flexibility and ease of operation and administration, whether the schemes are appropriately targeted to incentivise share ownership amongst those on lower incomes, and how other performance incentives compare to SAYE and SIP. The deadline for responses was 25 August 2023, and the government’s response to the call for evidence is awaited. For further details, see: Share Incentives weekly highlights—8 June 2023. Schedule 2 to the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) uses the phrase an ‘award of shares’ to identify shares that are either appropriated to employees or acquired on behalf of employees on a particular...

Trust drafting—Q&As

Trust drafting—Q&As This Practice Note is a collection of Q&As concerning trust drafting issues that may arise on creation and during the lifespan of a trust. For example, whether the accumulation period can be varied, whether trustees can be given certain powers, whether a deed is required for an appointment or release and how beneficiaries are added or excluded. It should be noted that although new Q&As are added to this Practice Note as they become available, individual Q&As are not currently maintained and state the law as at the date indicated in each case. For further guidance on the creation of trusts, see: Creation of trusts—overview and on the administration of trusts, see: Administration of trusts—overview. Can the accumulation period be varied? This Q&A considers the options to vary the accumulation period for a trust made prior to 6 April 2010 when the Perpetuities and Accumulations Act 2009 came into force: Can a pre-2010 discretionary trust be varied to alter the accumulation period, where the primary beneficiary is 21 and has...

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SIP trust deed

SIP trust deed FORTHCOMING CHANGE: Following its announcement as part of the Spring Budget on 15 March 2023, HMRC published a call for evidence on how to improve and simplify non-discretionary tax-advantaged Save As You Earn (SAYE) and Share Incentive Plan (SIP) schemes on 5 June 2023. The call for evidence focused on the effectiveness and suitability of SAYE and SIP, participation levels in the schemes, their flexibility and ease of operation and administration, whether the schemes are appropriately targeted to incentivise share ownership amongst those on lower incomes, and how other performance incentives compare to SAYE and SIP. The call for evidence closed on 25 August 2023, and the government’s response is awaited. For further details, see: Share Incentives weekly highlights—8 June 2023. [insert name of company] Trust deed [insert name of company] Share Incentive Plan This Deed is made on BETWEEN 1 [INSERT NAME OF COMPANY], a company registered in England and Wales under number [insert company number] (the Company) whose registered office...

SIP Partnership share agreement including matching shares

SIP Partnership share agreement including matching shares FORTHCOMING CHANGE: Following its announcement as part of the Spring Budget on 15 March 2023, HMRC published a call for evidence on how to improve and simplify non-discretionary tax-advantaged Save As You Earn (SAYE) and Share Incentive Plan (SIP) schemes on 5 June 2023. The call for evidence focuses on the effectiveness and suitability of SAYE and SIP, participation levels in the schemes, their flexibility and ease of operation and administration, whether the schemes are appropriately targeted to incentivise share ownership amongst those on lower incomes, and how other performance incentives compare to SAYE and SIP. The deadline for responses was 25 August 2023. For further details, see: Share Incentives weekly highlights—8 June 2023. Parties 1 Participant Name: [insert name of participant] Home Address: [insert address of participant] Payroll Number: [insert payroll number of participant] 2 Company Name: [insert name of company] Registered Address: [insert registered address of company] Registered Number: [insert registered number of company] 3 Trustee Name: [insert name...

Dive into our 4 Precedents related to Accumulation period

When is trust income retained by trustees of a discretionary trust treated as accumulated income and when is it treated as capital? Does the subsequent investment of the income affect whether it is treated as accumulated income or capital?

When is trust income retained by trustees of a discretionary trust treated as accumulated income and when is it treated as capital? Does the subsequent investment of the income affect whether it is treated as accumulated income or capital? These Q&As refer you to the following (along with the further commentary which is highlighted therein) which you may find useful in your research, see: • Can trustees be given a power to determine what receipts are income and what are capital? • Trustees of a Will trust held for A for life, remainder for B have invested the entire capital of the fund in investment bonds for many years. A value equal to the capital growth has been treated as income and paid to the life tenant A. There is no power in the Will for trustees to pay capital to an

If a SIP is run with no accumulation period and, up until the termination of the plan, Partnership Shares have been purchased on a monthly basis, is it correct to interpret paragraph 90(8) of Schedule 2 to the Income Tax (Earnings and Pensions) Act 2003 such that the trustee must default sell such Partnership Shares as and when such shares become tax free if no participant direction to transfer the shares is received?

If a SIP is run with no accumulation period and, up until the termination of the plan, Partnership Shares have been purchased on a monthly basis, is it correct to interpret paragraph 90(8) of Schedule 2 to the Income Tax (Earnings and Pensions) Act 2003 such that the trustee must default sell such Partnership Shares as and when such shares become tax free if no participant direction to transfer the shares is received? Under paragraph 90 of Schedule 2 to the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003), once a plan termination notice has been issued in relation to a share incentive plan (SIP), with a copy given without delay to all of the individuals listed in in paragraph 89(2), a three month period starts to run in accordance with paragraph 90(4). Paragraph 90(3) has the effect that the trustee must normally remove each of the SIP plan shares as soon as practicable after the end of this period. However, if such removal will trigger...

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Jersey Court rescues a charitable trust mixed with private purpose (In Re Estate of Constantin Mattas)

Private Client analysis: In an important judgment, the Royal Court in Jersey has recently confirmed, in Representation of Equiom Trust (CI) Ltd re Estate of Constantin Mattas that, as a matter of Jersey law, where a trust looks to provide for a mix of both charitable and non-charitable purposes, the non-charitable purpose can invalidate the charitable purpose; however, if the non-charitable purpose is itself invalid, the entirety of the trust property can be held for the charitable purpose. The court's decision arose in the context of proceedings to determine whether the ultimate disposal of a testator's residuary personal estate was valid, or whether there was, in fact, a partial intestacy. In reaching its conclusions, the court considered matters such as: whether there was an intention to create a trust within a will; certainty of objects; sovereign immunity; whether trusts of indefinite duration were permissible in Jersey law prior to the enactment of the Trusts (Jersey) Law 1984; the requirements for the formation of a charitable trust; and the circumstances in...

Private Client weekly highlights—3 November 2022

This week’s edition of Private Client highlights includes: (1) Re A v A and An NHS Trust, in which the Court of Protection considers the necessity of closed proceedings and covert administration of hormone treatment; (2) The Office of Tax Simplification is to review the tax rules for residential property income; (3) The first tranche of Charity Act 2022 changes in force from 31 October 2022; (4) The Jersey government extends financial crime risk assessment to trustees of privately-administered trusts; (5) The City of London Law Society and the Law Society publish an updated note on execution using electronic signatures; (6) C4C Investments Ltd v HMRC, a FTT decision on the obstacles that taxpayers face in order to amend their original notice of appeal; (7) Kelly-Lambo v Lambo, which addressed who, out of two women both claiming to be the surviving spouse of the deceased intestate, should be awarded the grant of letters of administration, and (8) Re Compound Photonics Group Ltd; Faulkner v Vollin Holdings Ltd, a Court of...

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