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Tax consequences of the grant of a lease extension if paid by the beneficiary of a trust.
Our clients are an interest in possession trust that was created before 1950 and the beneficiary of that trust. The trust’s sole asset is a leasehold residential property which is let. Trust income comprises the annual rent and the net income from the property is paid to the beneficiary and shown on form R185. The beneficiary is a life tenant of the trust and on her death the asset will vest to her children absolutely.
The trustees are negotiating a lease extension at an estimated cost of £50 000 which the trust does not have. It has been proposed therefore that the beneficiary will pay this.
We would appreciate readers’ advice on how to best conduct this transaction. We wish to avoid unfortunate tax consequences now or in the future for the present beneficiary who is quite elderly and for the children who will ultimately...
Please reach out to customer services at +44 (0) 330 161 1234 or 'customer.services@lexisnexis.co.uk' for further assistance.
