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Finance Act 2014

Background Note

5.Special tax rules exist for trusts with a disabled beneficiary. The rules:

  • Reduce the trustees’ tax liability on income and chargeable gains to an amount that, broadly, would be chargeable on the beneficiary if the gains had accrued and/or the income had arisen directly to that person.

  • Extend the annual exempt amount of chargeable gains that applies to trusts to match that available to individuals; and

  • ignore the normal charges to inheritance tax for trusts; instead, the property is treated as part of the beneficiary’s estate on their death.

6.Finance Act 2013 introduced a common definition of “disabled person” at Schedule 1A to Finance Act 2005.

7.Disability living allowance consists of a care component and a mobility component.  The care component is payable at three rates – highest, middle and lowest. The mobility component is payable at two rates – higher and lower. Following the introduction of the Welfare Reform Act 2012, the allowance is being phased out for those of working age.

8.Personal independence payment consists of a daily living component and a mobility component. Both the daily living component and the mobility component are payable at two rates – standard and enhanced.

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