As you will be aware as part of the Budget, the Government announced that it would raise the tax rate on trusts from 33% to 39%. The intention is to align the top personal rate with the Trustee tax rate.
New information from Inland Revenue has shown an almost 50% spike in income subject to the trustee rate when the new personal income rate came into effect.
While the change to the trustee tax rate is still subject to consultation through the Select Committee process, the change is expected to take effect from April 2024.
The Budget Press Release stated, “Trusts with lower-rate beneficiaries can continue to use existing rules to mitigate the higher trustee rate” - however, this does require a Trust to distribute its annual income to beneficiaries on lower tax rates. And, with other recent changes to the Trustee act this option may not be the right option for your Trust and what it is trying to achieve.
We will monitor the progress of the legislation and monitor how this will impact you and your Trust.
In the meantime if you have any immediate concerns please contact Bobbie, Zoe, Katherine or Nicole.
