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bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4810
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My client's "bare trust" received £6482 net dividen

Customer Question

Hi, my client's "bare trust" received £6482 net dividends (tax £720) plus a quarter of her relative's property £445,000. Her trust then purchased a new property for £395,000. The trustees seem to think that she is liable for CGT even though she has only
actually received £5,000 into her own bank account. She also tells me the trustees (her uncles) are not allowing her to take any more money out of this trust (apart from the £5k already rec'd), even though she is 26. What entries if any need to go onto her
tax return and approximately how much tax is she likely to pay?. Her uncles are being very difficult!!
Submitted: 2 years ago.
Category: Tax
Customer: replied 2 years ago.
The property proceeds were £1780000 split 4 ways so my client's trust received £445000
Customer: replied 2 years ago.
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Customer: replied 2 years ago.
Can somebody please reply. I sent this question last night but I've not heard back. You can phone me on ***********
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. The trustees are correct. The matter of bare trusts is covered in HMRC Advice sheet TSEM1563 viz: 'A bare or simple trust is one in which each beneficiary has an immediate and absolute title to both capital and income. The beneficiary of a bare trust is taxable on the trust income and gains. Beneficiaries must include trust income and gains in any Tax Return they are required to complete or in any forms R40.' However, I would be interested to know what capital gain the trust has made which would generate a liability to CGT. The only gain so far indicated is the quarter of her relative's property deducting a quarter of the probate value of the said property. Unfortunately the question is silent on this point. In any event the Trustee is required [same source]: 'The trustees of a bare trust may pay the tax due to HM Revenue & Customs on behalf of a beneficiary, but it is the beneficiary who is strictly chargeable to tax.' I would suggest that your client would be well advised to consult a local, trusted solicitor to draw her Trustees attention to their duties and the appropriate way to conduct themselves and possibly petition the Court for their removal, particularly with regard to their attitude and unhelpful approach. At 26 she should be quite capable of managing her own affairs. I do hope that I have shown you a way forward in this matter.