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What are the tax rates for Discretionary Trusts?

The following tax facts should be viewed as an indication of the rates and allowances available and relate to the current tax year (2024/2025) unless stated otherwise. Tax law is notoriously complex and we cannot replicate every rule, nuance or exemption here. Therefore you should not make, or refrain from making, any decisions based on this information alone. If you are in any doubt as to the suitable course of action we recommend you seek tax advice. Remember tax rules can change and depend on your personal circumstances.

Tax Tax rate
Income tax rate (above £1,000 per annum) 45%
Capital gains tax allowance £6,000 (divided by the number of trusts settled subject to a minimum of £1,200 per trust)
Capital gains tax rate 20% / 28% for residential property
Inheritance tax (transfers into discretionary trusts) 20%
Dividend tax rate (up to £1,000 per annum) 7.5%
Dividend tax rate (above £1,000 per annum) 38.1%

Please note the dividend tax rate applies to the total level of income received within the trust and not just to the level of dividends received.

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