Deemed disposals

Produced by Tolley in association with

Trusts and Inheritance Tax

Guidance

Trustees are sometimes treated as having made a disposal of the trust property even if they have not sold or transferred the property. You will need to consider the capital gains taxation of the trustees where they make such deemed disposals.

Trustees are deemed to make disposals of the trust property where:

•
a beneficiary becomes absolutely entitled to the trust property
•
when certain interests in possession in the trust property come to an end

The following discussion of the main deemed disposal scenarios is summarised in the Flowchart ― disposals and deemed disposals.

Beneficiary becoming absolutely entitled

A beneficiary becomes absolutely entitled to trust property where he is able to dictate how the trustees are to deal with the property (eg by demanding that the trustees pass ownership of it to him). This will be the case in one of the following:

•
the trustees have exercised their powers of advancement or appointment of trust capital
•
an interest in possession comes to an end and the remainderman of the trust

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Paul Davies

Partner at DWF LLP

I am a partner in the private client department of DWF LLP, based in Manchester. I specialize in providing advice on tax and succession planning to high net worth individuals, executors and trustees. I will assist clients in the creation of wills and lasting powers of attorney and in the creation, restructuring, and dissolution of trusts and other wealth holding vehicles whether onshore or offshore. I often act as a professional executor and trustee.. He has chaired the ICAEW's Employment Taxes & NIC Committee for many years and is a past chairman of the Institute's Tax Faculty. He is also a member of two relevant technical sub-committees of the CIOT.

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