The trust has a significant portfolio of shares which is standing at a capital gain. What will the inheritance tax and capital gains tax consequences be bearing in mind the proposals in Finance Bill 2006?
Query T16 808 — Squabble.
Reply by Lacuna:
Provided the trustees have the necessary powers it should be possible effectively to divide the trust into three separate parts without triggering disposals for capital gains tax purposes. Reference could usefully be made to Roome v Edwards [1981] STC 86; Bond v Pickford [1983] STC 517; and Swires v Renton [1991] STC 490; HMRC's Capital Gains Manual at 37800 et seq and Statement of Practice 7/1984. The parts would however continue to be treated as a single settlement for capital gains tax purposes with a maximum annual exemption of one-half that available to an individual (so £4 400 for 2006-07) and scope...
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