Trusts and tax for ATX-UK - part 2: self-test

Test your understanding

(1). Gerard is the life tenant of an interest in possession trust. The trust assets consist of four rental properties. Gerard’s children are the remaindermen of the trust.

(i)  Explain how the income arising in respect of the rental properties will be subject to income tax.
(ii)  Explain how the CGT base cost of a rental property will be calculated following the transfer of the property from the trust to one of the remaindermen.

(2). What are the IHT implications of a transfer of property from a trust to a beneficiary?

(3). State whether the following statements are true or false.

A  No chargeable gain will arise on the transfer of trust assets from a trust to a beneficiary.
B  On the transfer of a painting to a trust, gifts hold-over relief will only be available if the transfer results in an IHT liability.