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bigduckontax, Accountant
Category: Tax
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My mum set up an account for me with Invesco perpetual before

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My mum set up an account for me with Invesco perpetual before I was 18, I'm 31 now and we haven't got round to changing it over to my name although it is designated to me, if I wanted to cash this money in now who would be liable for capital gains tax, me or my mum? Thanks
Hello, I'm Keith and happy to help you with your question.
This query is of fundamental importance, in which part of the UK was the account set up?
Customer: replied 3 years ago.
It was set up in England, we live in Oxfordshire to be precise, thanks paul
Right Paul, the reason for the question is that the Scottish legal system would have made a significant difference. Your Mother has probably crated a Bare Trust.
My advice would be to have the account changed over to your name before you make any withdrawal. Here is a general background opinion from Accounting Web:
'Background – bare trusts
A bare trust arises when someone (such as a parent) takes control of and looks after an asset (such a cash) on behalf of another, who is the beneficial owner (such as a child). The parent is the legal owner, and the child the beneficial owner of the asset in question. Such a trust contains capital and income, and it may well have come into existence because of the generosity of a grandparent, friends or the parent. As a minor, a child cannot legally “give receipt”, which practically means cannot set up and manage their own bank account; the parent has to set up the account on his or her behalf and this creates what is known as a bare trust.
Any income arising under such a bare trust is treated as that of the child, but there is a slight anomaly if the funds are provided by the parent. In that case, s.629 ITTOIA 2005 kicks in and the parent is taxed any income exceeding £100 and deemed a settlor of a settlement in favour of the child. It is still a bare trust legally though. In other cases (where funds are provided by other relatives or friends) providing that the child’s personal allowance covers the income arising from the bank or savings account (or shares of whatever the asset), no tax is due and no SA return, trust or otherwise, is required to be submitted to HMRC.'
From this it would appear that any capital gain made on the sale of the investment would be you Mother's, but the position is bedeviled by the fact that you are now 13 years into your majority. It would have been better had the trust been settled at your age 18.
Complications abound [same source]:
'Prospective (and retrospective) tax traps
If HMRC’s view is correct, the property within the trust would be subject to a tax charge every ten years and on exit. It also means that any transfers into “the settlement” by way of a gift will become chargeable lifetime transfers, at the present they are potentially example transfers (PETs), and providing the donor survives seven years, escape a tax charge. It also means that the IHT exemption for small gifts of £250 p.a. or less no longer applies as these type of gifts need to be outright and a transfer into such a settlement is not.'
The whole thing is rapidly becoming a nightmare. I suggest that you may need independent advice on this matter. However, under the Capital Gains Tax (CGT) regime each individual has an Annual Exempt Allowance (AEA) of 11K so if the gain is below this level then who ever is liable would have, as they say, no worries. Always bear in mind that it is only the gain which is subject to CGT, not the capital sum. The purpose of the 10 yaer taxation regime for trusts was introduced to reduce tax avoidance by placing assets beyond the reach of the donor.
I do hope I have opened your eyes to the latent problems in this matter. Please don't hesitate to come back to me if you need. It all really hinges upon the sums involved.
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Thank you for your support.