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Vulnerable beneficiary trusts

Produced by a Tolley Trusts and Inheritance Tax expert
Trusts and Inheritance Tax
Guidance

Vulnerable beneficiary trusts

Produced by a Tolley Trusts and Inheritance Tax expert
Trusts and Inheritance Tax
Guidance
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What is a vulnerable beneficiary trust?

The category of ‘Trusts with vulnerable beneficiary’ was created by Finance Act 2005 to introduce special income tax and capital gains tax reliefs where property is held on trust for the benefit of a ‘vulnerable person’.

A vulnerable person is either:

  1. a disabled person (as defined below)

  2. a ‘relevant minor’, defined as a young person who has not yet attained the age of 18, and at least one of his parents has died

The definition of a ‘disabled person’ includes someone who:

  1. cannot manage his own affairs because of mental disorder

  2. is entitled to receive certain welfare benefits indicating a physical or mental disability

FA 2005, s 38

For the full definition and a list of the qualifying welfare benefits, see the Disabled and vulnerable beneficiary trusts ― uniform definitions guidance note.

Aim and effect of the relief

The intended effect of the available relief is to tax the trust as if the income or gains had arisen directly to the vulnerable

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  • 01 Nov 2024 07:11

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