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bigduckontax
bigduckontax, Accountant
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What is situation on capital gains on a trust.The trust sold

Customer Question

What is situation on capital gains on a trust.The trust sold shares for £60,000.
These were purchased in 1986 for £5000.please advise.
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.
Hello, I'm Keith and happy to help you with your question.

The trust is liable for Capital Gains Tax (CGT) on the gain made, ie 55K at a rate of tax of 28%. There is an Annual Exempt Allowance of 5.5K for trusts, but there is more if the Trust was set up for a disabled person (see HMRC advice below). The cost of the purchase of the shares plus stamp duty if any inflates the purchase price and the cost of sales reduces the selling price so these need to be taken into account as they can reduce the actual gain and as the TV advert says 'Every Little Helps!' Worst case scenario is 60K - 5K - 5.5K = 49.5K @ 28% = 13.86K quid tax due.

Here is HMRC advice on this matter:

'Capital Gains Tax rate and the annual exempt amount for trustees

The rate of Capital Gains Tax for trustees for the 2014 to 2015 tax year is 28%.

The annual exempt (tax-free) amount in 2014 to 2015 for most trusts is £5,500. An exception to this is a trust set up for a beneficiary who is disabled. In these cases the annual exempt amount is £11,000 - the same as for individuals.'

Actually the release is slightly wrong. As far as I am aware the allowance for individuals is 11.1K!

I do hope I have been able to be of some help you you with your question.
Expert:  bigduckontax replied 3 years ago.
Sorry, I have made an error, the actual limit for individuals in 14/15 is indeed 10K! 10.1K is for 15/16 a colleague has just reminded me.

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