Figures issued by HMRC show that the number of self-assessment returns submitted by trusts for the year 2012-13 (the latest year for which figures are available) fell for the fifth consecutive year.
HMRC’s figures indicate that in 2007/8 201,000 such trusts submitted returns which fell to a figure of 160,500 for 2012-13.
The same figures show that the income of trusts and as a result the income tax being paid from them is also falling.
It is difficult to establish exactly why this may be the case but a number of factors may be involved such as the following:
• The fall in the value of assets and hence the income that they produce.
• The series of measures that have been introduced to increase the level of taxation levied on trusts.
• The introduction of the General Anti-Avoidance Rule (GAAR).
• The uncertainty that has surrounded the future taxation of trusts over the last 18 months or so whilst the government and HMRC have been consulting on the subject.
This having been said, trusts still represent an attractive way of protecting assets and preserving the value of assets for future generations and although the rates of tax applicable to many types of trusts have increased over recent years, their use can still generate significant tax savings and other benefits for families who make use of them.
Ian Newcombe is a partner and head of the private client team in Exeter, Stephens Scown have offices and Private Client teams in all of their offices who can assist in providing advice on the use and taxation of trusts. To contact Ian, please call 01392 210700, email firstname.lastname@example.org.