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Bare trusts and minors and chargeable events — an HMRC clarification. JOHN WOOLLEY explains
KEY POINTS
- Capital investment bonds held in trust are an effective estate planning tool.
- New tax rule for bonds held in bare trusts.
- Change is effective from 2007-08.
- Scope for school fees planning.
The use of a capital investment bond (single premium bond) held inside a trust has for a long time been an effective form of estate planning with many different types of trust delivering different degrees of settlor control and access.
In all cases the investment bond being a non-income producing asset represented a simple to administer trustee investment. In most cases the rules for the assessment of chargeable event gains resulted in the assessment of gains on the settlor.
This was especially since the Finance Act 1998 when the income tax position on the encashment of all new investment bonds...
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