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TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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A discretionary trust has unrealised gains of £100,000. If

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A discretionary trust has unrealised gains of £100,000. If the trustees distribute the capital to the beneficiaries, are the Trustees liable for CGT on this at 40%?

The rate of CGT for trusts is 28%.

Take a look here for information on when CGT is payable by the trustees of a discretionary trust. There are some reliefs and exemptions as you will see towards the bottom of the page.

It should be possible to avoid an immediate CGT charge on a transfer of asset out to the beneficiaries of the trust by making a claim for holdover relief. This is not possible for settlor interested trusts. A settlor interested trust is one where the settlor or their spouse can benefit from the trust or the settlor's minor and unmarried children/stepchildren can benefit from the trust. Take a look at the notes in HS295 here for more information and a claim form.

I hope this helps but let me know if you have any further questions.
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