Year: 2025
Type: article
Abstract: INTRODUCTION B are trusts, often referred to as "nominee", "simple" or "naked" trusts-unlike ordinary express trusts-are still trusts but are transparent for income tax, capital gains tax (CGT) and inheritance tax (IHT) purposes-in other words they don't exist as far as HM Revenue and Customs (HMRC) is concerned as the beneficiary is deemed to own the trust asset personally.The bare trustees have no obligation other than to hold the asset for the beneficiary and pass the legal title of the asset to the beneficiary upon demand.They are not treated the same as ordinary express trusts which have their own trust returns for trusts and Abstract For tax purposes, bare trusts are effectively ignored-they are transparent, the beneficiary is treated as the real owner of the trust asset with any income arising therefrom taxed upon them.However, it is still a trust; whilst discretionary and interest in possession trusts (which I shall call "ordinary express trusts") are subject to special rules with trustees subject to tax, these rules do not apply to bare trusts when, in many cases, the trustees may have similar custodial duties.Also, bare trusts are subject to anti-money laundering regulations and, for tax purposes, adopt other guises such as partnerships and implied trusts.There is thus some disparity between bare trusts and ordinary express trusts, but this disparity may be what makes the bare trust unique.An option to break the transparency and offer settlors a halfway house between transparent tax treatment and greater opaqueness of ordinary express trusts might be a useful feature.
Source: Amicus Curiae
Author: Pablo Cortés
Language: English
Topic: Taxation and Legal Issues
Subfield: Accounting
Domain: Social Sciences
Open Access status: diamond
Funders: Shell, Amicus Therapeutics
OpenAlex ID: W4411958992