Despite the rumours about possible changes to Inheritance Tax and Stamp Duty Land Tax, last week’s Autumn Statement instead headlined on reducing National Insurance. However, a key update on income tax, directly impacted trusts and estates.

Income Tax for trusts and estates
As previously announced and legislated, trusts will no longer be subject to the standard rate band (basic rate band) in 2024/25. Discretionary trusts will no longer be subjected to the £1,000 standard rate. Instead, trusts with an income of £500 or less will have no tax to pay.

Where a settlor has created more than one trust, the threshold will be £500, divided by the total number of trusts, subject to a minimum of £100 per trust. This measure aims to reduce the administrative burden for small trusts and estates. All income over the threshold is subject to trust tax rates.

When estate income does not exceed £500, no tax will be imposed. Beneficiaries will also be tax-free if income is paid to them under such circumstances.

Capital Gains Tax
With the exemption reducing from £6,000 to £3,000 on 6 April 2024, a maximum of £1,500 may be grated to discretionary trusts under interest in possession, subject to a minimum of £600 per trust for each settlor.

There were no announcements on changes to inheritance tax.

Any measures mentioned are subject to potential changes until they are officially enacted into law.