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bigduckontax, Accountant
Category: Tax
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A trust property on two floors is let to a beneficiary for

Customer Question

A trust property on two floors is let to a beneficiary for a nominal amount. She declares profits as personal income. The attic floor has not been used for many years but has now
been made in to separate accommodation . The trustees wish to allow a sub lease to another beneficiary who will declare income from letting the attic flat as her personal
income. Is this permisable
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. This is permissible providing the powers of the Trust as set out in the Trust Deed so provide. However, I do have one slight worry. In utilising the Trust's assets in thus way ie letting at nominal rentals could be reducing the returns which should more properly be enhancing the Trust's funds. However, if the tenants are the beneficiaries of the Trust and so provided for in the Trust Deed this difficulty does not arise. The Trustees should be rather careful in this area as they might be deemed not be conducting Trust affairs appropriately. I do hope that my reply has been of assistance.