Discretionary Trusts - Terrorism, tax evasion and trusts: The unholy trinity targeted by the British Government in recent years

...with the introduction of non-repayable tax credits on dividends in 1999, the increase in the trust tax rate from 34% to 40% in 2004, the inheritance tax changes in FA 2006, the new rules for offshore trusts in 2008, and now a 50% income tax rate for discretionary trusts with non-dividend income. With such low income returns at present, it may be tempting to dismiss the increase as having little impact in actual terms. On the contrary, at a time of low returns it is more pressing than ever for trustees to minimise their income tax burden. This article looks at some of the options open to them.

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