To think that it's time tax exemption for trust funds ended?

[Bibblebobblebibble]

So, this guy getting married today inherited £9 billion and didn't pay any inheritance tax on it, because trust funds are exempt from inheritance tax.

I don't get how this is fair/ possible - can someone explain to me how this is still a thing?

Gawd, another 'let's bash those with money' thread

Trust funds are not “exempt from tax”. Tax is due on many types of trusts. You don’t pay iht if you don’t inherit any assets.

Tax is very complex but it’s not at all correct that it’s easy to avoid by putting assets in a trust.

The Duke of Westminster doesn’t- he pays income tax like everyone else. The trust pays a tax charge every 10 years on its assets.

No.

But I would radically simplify the entire tax system. It's monstrously complicated, allowing clever advisers to dream up ever more complicated tax avoidance schemes which tie government up in knots and waste resources while being very expensive for businesses.

You don’t seem to understand the situation or the law though. So I think the comment is fair enough

I confess I don’t know much about trust tax law. However I sympathise with the OP’s point which is surely more broadly about wealth taxes. I think the key is the sheer scale. The Duke of Westminster or whoever he is, is one of the richest people in Britain. He or his family trust own swathes of land and property in London. That’s very different from keeping a marginal hill farm together or making sure generational wealth doesn’t get bought up by big development companies.

I think it must be complex deciding where to draw the line, and I wouldn’t want to see big houses and estates broken up as they weee so often post WW2. However there is a massive fairness issue here: this person must be in the top 1% if not 0.1% and there must be a way to tax some of that wealth back into the Treasury. We are all thinking about tax and budgets coming up to the election and those most able to pay should shoulder the burden.

(I’ve been a higher rate tax payer most of my life and whilst it’s eye watering I’m also glad it goes to pay for public services.)

Tell us that you know nothing about trusts and how they are taxed. Hang on, you have just done it.

No what? No “trusts shouldn’t be exempt from iht”? They’re not.

how would you simplify the tax system?

It’s not his money is the short answer. He is taxed on what he receives.

Trustees pay income tax on their income annually. They also pay capital gains tax on any disposals. In this respect they are essentially taxed in the same manner as individuals, except they do not have a personal allowance and have a lower annual exempt amount, and depending on the type of trust they are taxed at either advanced or basic rates.

If any income is distributed to a beneficiary, that beneficiary also pays income tax. They can have a tax credit for any tax already paid by the trustees so the same income is not taxed twice.

If capital is distributed out of the trust to a beneficiary, inheritance tax is charged.

Trustees also pay inheritance tax every ten years on the total value of their assets.