§ Mr. Malcolm BruceTo ask the Chancellor of the Exchequer if he will estimate the revenue effect on the Exchequer in(a) 1997–98 and (b) 1998–99 of putting the taxation of trusts on the same basis as the taxation of individuals; and if he will make a statement. [13256]
§ Mr. Jack[holding answer 29 January 1997]: I regret that the information as requested is not available.
§ Mr. BruceTo ask the Chancellor of the Exchequer if he will estimate the revenue effect on the Exchequer in(a) 1997–98 and (b) 1998–99 of applying a 40 per cent. capital gains tax rate for interst in possession trusts; and if he will make a statement. [13257]
§ Mr. Jack[holding answer 29 January 1997}: The capital gains tax yield is tentatively estimated to increase by around £50 million if a capital gains tax rate of 40 per cent. were applied to those gains of trusts which will be chargeable at 23 per cent. for 1997–98. The yield for later years would depend on future levels of capital gains. In practice, the revenue effect of such a change may be significantly different due to changes in taxpayers' behaviour.
The circumstances of beneficiaries of interest in possession trusts vary. Some may not be liable to capital gains tax at all, while others may be liable at 40 per cent. on their personal gains. Applying a rate equal to the basic rate to all such trusts reflects this range of potential liabilities while at the same time avoiding the need for beneficiaries to become involved in making capital gains tax computations.