No. of Recommendations: 0
A discretionary trust was set up following the death of a parent, the testator.

The qualifying half share of the assets were left in trust to the wife, son, and others via a deed of variation.

The deed mentions the testator, and the beneficiaries, one being the wife. It does not mention ‘the settlor’.

However, in trying to fill in a tax form, R185(Trust Income), with the intention of using the tax pool and getting some personal tax refunded, following a gift from the trust interest, it is necessary to know if the discretionary trust is non settlor-interested or settlor-interested in order to fill in either box 1 or box 2.

Is it clear, from the above, which type of trust it is, and what is the effect of filling in one box or the other?

Since tax at 40pc or 50pc has been paid on savings interest in the trust some refund is expected by the beneficiary. Have rules changed to allow some of this 'gain' to be taken back from the settlor?

Print the post Back To Top
No. of Recommendations: 1
I note that the trust was created in a Deed of Variation rather than by deceased's will. A Deed of Variation will only write the creation of the trust back to deceased's estate for inheritance tax and capital gains tax purposes (assuming the relevant elections were included in the DoV).

For income tax purposes, the beneficiaries who originally received the assets via the will and who varied their destination, will be the settlors.

Assuming the original will left all to the wife, she would be deemed to be the settlor of the trust for income tax purposes. So, yes, the trust would be settlor interested in that case.
Print the post Back To Top
No. of Recommendations: 0
Thank you.
Print the post Back To Top