View more on these topics

Discretionary trust look to bonds to sidestep tax

Legal & General says more high-net-worth trustees of discretionary trusts are considering shifting their investments into insurance bonds to avoid higher tax charges.

From April 6, 2010, dividend income tax will increase from 32.5 per cent to 42.5 per cent and income tax will increase from 40 per cent to 50 per cent within discretionary trusts.

Head of tax and estate planning Mark Green says that, on top of these tax rises, if discretionary trust trustees put money into a unit trust and encash a unit, they would pay 18 per cent capital gains tax, making it expensive to distribute to a beneficiary.

He says: “With insurance bonds, there is no ongoing tax charge and you can withdraw up to 5 per cent. You are sidestepping the charge until a later period.”

Worldwide Financial Planning IFA Nick McBreen says: “There is an opportunity for trustees to review the investment structure and assets held within the trust.”

Recommended

F&C UK Select Trust turns around performance

Phil Doel’s F&C UK Select Trust delivered a net asset value total return of 9.2% over the first half of 2009, outperforming its benchmark, the FTSE All-Share Index, by 8.4%, according to interim results released today.This was a significant turnaround in performance, after the trust lagged its benchmark by 12.5% in 2008. F&C says it […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com