CG33520 - Disposals by trustees: Expenses
Incidental costs of ending or varying settlement
Transfer to person absolutely entitled
Fees of other professional trustees
Incidental costs of varying settlement
TCGA92/S38 (2)
CG15250+ sets out the basic types of expenditure allowable as `incidental costs’ of making an acquisition or disposal under TCGA92/S38. As well as costs incurred in the ordinary course of buying and selling trust investments trustees may also incur costs when a settlement ends or is varied.
Incidental costs include the costs of legal and actuarial services including Stamp Duty on transfers and ancillary expenses incurred in varying or ending a settlement (see CIR V Chubb’s Trustee, 47TC353), or upon the termination of an interest in possession.
The allowable expenditure may include fees in respect of discharges and commission on the transfer of assets to beneficiaries, but not insurance premiums, see Allison v Murray, 51TC57.
The expenditure should be apportioned between chargeable and non-chargeable assets by reference to value.
The withdrawal fees charged by the trust departments of banks etc usually relate largely to general administrative costs which are not allowable. The amounts shown in SP02/04, see below cover the element of withdrawal fees relating to the actual work done on valuation or transfer of assets.
Transfer to person absolutely entitled
When trustees transfer property to a person absolutely entitled to that property that person may bear the costs of the transfer. He or she can deduct the costs of the transfer on a later disposal of the property. Alternatively, he or she may allow the trustees to deduct the costs in computing their chargeable gain on the deemed disposal. In this case TCGA92/S52(1) prohibits the same deduction from being allowed twice.
Fees of corporate trustees
HMRC publish a scale of charges that will be allowed as a deduction for incidental costs incurred by personal representatives of deceased persons and by corporate trustees. The latest version is SP02/04 and applies to acquisitions and disposals made by corporate trustees on or after 6 April 2004. It replaces SP8/94 which applied to disposals made on or after 6 April 1993. These charges have been agreed with the representative bodies but trustees are not required to use them. They may claim the allowable expenditure actually incurred.
Fees of other professional trustees
Where the trustees include a bank or other professional trustees, fees charged by such trustees against (and received from) the trust funds may be allowed in so far as these fees fall within CG15250+ or as discussed above and are on a normal scale, that is, that are habitually charged to customers or clients at arm’s length.