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Readers' forum : Unequal beneficiaries

12 September 2017
Issue: 4615 / Categories: Forum & Feedback

Establishing the nature of trust capital subject to income tax.

I have an old interest-in-possession trust and an estate both of which are part of a large development project in receipt of overage payments linked to the sales price of each property.

The landowners took advice before exchanging contracts. Counsel’s opinion was that there was no expectation that any overage would become payable (hence no adjustment was included in the capital gains calculations for this) and if any overage were to be paid in future the landowners would be liable to income tax on the full amount received under ITA 2007 s 756 (which was repealed in July 2016 and replaced by s 517A to s 517U).

The beneficiaries of the estate are the deceased’s son and daughter who are also life tenants of the trust. However the settlor was an old-fashioned farmer and he created the trust so that his son and daughter...

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