View more on these topics

PBR tax hike on trusts will make them “less attractive,” says Skandia’s Jelley

The Government is increasing the dividend rate for discretionary trusts from 32.5 per cent to 37.5 per cent and upping their rate of tax from 40 per cent to 45 per cent on other income, under new measures announced in today’s pre-Budget report.

The new rates will be brought in from 2011-2012, meaning the UK public will need to vote Labour to see them implemented.

According to Skandia head of tax and financial planning Colin Jelley the rate hike will make trusts “less attractive” which is disappointing given the number of people who set up trusts for non-tax purposes. He says: “It doesn’t have a significant impact on the bonds and collectives debate because you can assigned bonds in and out of a trusts without any immediate tax liabilities and you can do the same with collectives.”

Jelley says trustees holding a collective may be disadvantaged but it depends on what they plan to do with the income. He says: “Where the income is distributed to the beneficiary, they will pay tax at their own marginal rate. However those who accumulate the income will be forced to pay the 45 per cent tax.”


Recommended

On the defensive

Warren Buffett says: “Be fearful when others are greedy and be greedy when others are fearful”. In October, he put this into practice, buying US equities for his personal account and predicting that “the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up”. There are several reasons why now might be a good time to revisit the equity market.

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