§ Mr. BurnsTo ask the Chancellor of the Exchequer if he will make a statement about the outcome of consultation on the document "Trusts: The Income Tax and Capital Gains Tax Treatment of UK Resident Trusts".
§ Mr. DorrellThe Government have decided not to implement the central proposals in the consultative document on trusts published in March 1991.
The main option discussed in the consultative document was a proposal to integrate the income tax and capital gains tax treatment of trusts. As for individuals, trustees' income and chargeable gains would have been added together, with gains being treated as the top slice of income, and taxed at the basic rate up to a certain threshold and then at the higher rate.
The response to the document was varied, but a common concern was that treating capital gains as the top slice of income would adversely affect beneficiaries entitled to trust capital, because gains more than income would tend to be charged at the higher rate. In the light of tine representations received, the Government have concluded that the proposal to integrate the income tax and capital gains tax treatment of trusts should not be pursued.
The Government are continuing to consider the responses on some of the more detailed issues discussed in the consultative document.