CG33520 - Disposals by trustees: Expenses
Incidental costs of ending or varying settlement
Transfer to person absolutely entitled
Fees of other professional trustees
Incidental costs of varying settlement
TCGA92/S38 (2)
CG15250+ sets out the basic types of expenditure allowable as `incidental costs� of making an acquisition or disposal under TCGA92/S38. As well as costs incurred in the ordinary course of buying and selling trust investments trustees may also incur costs when a settlement ends or is varied.
Incidental costs include the costs of legal and actuarial services including Stamp Duty on transfers and ancillary expenses incurred in varying or ending a settlement (see CIR V Chubb’s Trustee, 47TC353), or upon the termination of an interest in possession.
»Ê¹ÚÌåÓýapp allowable expenditure may include fees in respect of discharges and commission on the transfer of assets to beneficiaries, but not insurance premiums, see Allison v Murray, 51TC57.
»Ê¹ÚÌåÓýapp expenditure should be apportioned between chargeable and non-chargeable assets by reference to value.
»Ê¹ÚÌåÓýapp withdrawal fees charged by the trust departments of banks etc usually relate largely to general administrative costs which are not allowable. »Ê¹ÚÌåÓýapp amounts shown in SP02/04, see below cover the element of withdrawal fees relating to the actual work done on valuation or transfer of assets.
Transfer to person absolutely entitled
When trustees transfer property to a person absolutely entitled to that property that person may bear the costs of the transfer. He or she can deduct the costs of the transfer on a later disposal of the property. Alternatively, he or she may allow the trustees to deduct the costs in computing their chargeable gain on the deemed disposal. In this case TCGA92/S52(1) prohibits the same deduction from being allowed twice.
Fees of corporate trustees
HMRC publish a scale of charges that will be allowed as a deduction for incidental costs incurred by personal representatives of deceased persons and by corporate trustees. »Ê¹ÚÌåÓýapp latest version is SP02/04 and applies to acquisitions and disposals made by corporate trustees on or after 6 April 2004. It replaces SP8/94 which applied to disposals made on or after 6 April 1993. »Ê¹ÚÌåÓýappse charges have been agreed with the representative bodies but trustees are not required to use them. »Ê¹ÚÌåÓýappy may claim the allowable expenditure actually incurred.
Fees of other professional trustees
Where the trustees include a bank or other professional trustees, fees charged by such trustees against (and received from) the trust funds may be allowed in so far as these fees fall within CG15250+ or as discussed above and are on a normal scale, that is, that are habitually charged to customers or clients at arm’s length.