Capital and Income in Trusts: Classification and Apportionment
- Law Commission
- TSO (The Stationery Office)
Trusts are important to the national economy and provide a range of benefits to individuals and charitable purposes. This project affects charitable and private trusts that are set up in a way which distinguishes capital and the income it produces.
The project was referred to the Law Commission as a result of concerns about current trust law raised during the passage of the most recent piece of trust legislation - the Trustee Act 2000 - through Parliament.
The Law Commission was asked to consider, in particular:
the rules governing the classification of trust receipts as income and capital;
the circumstances in which trustees must apportion receipts and outgoings between income and capital; and
the rights and duties of charity trustees in relation to investment returns on a charity's permanent endowment.
In this report, 'Capital and Income in Trusts: Classification and Apportionment (HC 426)', the Commission recommends the abolition of the equitable and statutory rules of apportionment for all new trusts and the introduction of a new rule of classification for tax-exempt corporate demergers. It also recommends a new statutory provision that will make total return investment more easily accessible to charitable trusts with a permanent endowment.
These recommendations follow extensive consultation - please see: 'Capital and Income in Trusts: Classification and Apportionment - A Consultation Paper (Consultation Paper 175)' (ISBN 9780117302617) - and have been welcomed by the Trust Law Committee.
|Format||Paperback||Published||07 May 2009|
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