Tax on trust fund - is this correct

splatt30

Hi,
I wonder if anyone can confirm that my understanding of the following is correct.

My maiden aunt gifted myself, my brother and cousins some money in trust 7.5 years ago. As I understand to reduce inheritance tax burden. This year, after the 7 years the trusts matured and the money was given to us.

As I understand it the gift is tax free, but I am liable to pay income tax (at 40% as a higher rate tax payer) on the interest which was gained during the 7 years that the money was in trust.

This is not a small figure so I want to be sure that this is correct and that there is no way to reduce the sum owed. I presume I just declare it in my self assessment for 2015/16? And if so does it just go as "interest on savings"?

Thanks for any input

getmore4less

Check but I think the trust should pay tax and issue you with a tax credit.

antrobus

splatt30 wrote: »

Hi,
I wonder if anyone can confirm that my understanding of the following is correct.

My maiden aunt gifted myself, my brother and cousins some money in trust 7.5 years ago. As I understand to reduce inheritance tax burden. This year, after the 7 years the trusts matured and the money was given to us.

As I understand it the gift is tax free, but I am liable to pay income tax (at 40% as a higher rate tax payer) on the interest which was gained during the 7 years that the money was in trust.

This is not a small figure so I want to be sure that this is correct and that there is no way to reduce the sum owed. I presume I just declare it in my self assessment for 2015/16? And if so does it just go as "interest on savings"?

Thanks for any input

What kind of trust?

Normally the income of a trust is subject to income tax every tax year just like every other taxable person. If this trust went on for 7 years, either the trustees paid the income tax due, or they supplied you with the information to enter on to your tax return.

Why not ask the trustees?

xylophone

What kind of trust was this?

https://www.gov.uk/trusts-taxes/overview

https://www.gov.uk/topic/personal-tax/trusts

http://findlaw.co.uk/law/estate_planning/trusts/9556.html

splatt30

I genuinely don't know. The whole thing came completely out of the blue. It was with Canada life and was held in Jersey I think. How can I find out?

Mattygroves2

splatt30 wrote: »

I genuinely don't know. The whole thing came completely out of the blue. It was with Canada life and was held in Jersey I think. How can I find out?

Ask the Trustees.