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HMRC internal manual

Trusts, Settlements and Estates Manual

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HM Revenue & Customs
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Introduction to trusts: supplementary deeds: deed of advancement

Trustees use a deed of advancement to apply capital for the benefit of beneficiaries. It cannot apply retrospectively. It is effective only from the date they execute the deed. This can have Capital Gains Tax implications. Details are at CG37330 onwards. External customers can find this guidance at http://www.hmrc.gov.uk/manuals/cgmanual/CG37330.htm.

Effects of an advancement

The advancement can give someone absolute title to capital. This may have Capital Gains Tax implications. Details are at CG37330 onwards (external customers can find this guidance at http://www.hmrc.gov.uk/manuals/cgmanual/CG37330.htm). It can impose new terms on how the trust income and capital is to be dealt with. That may simply be a change of the existing trust. Or it may be a separate settlement for CGT purposes (CG37830 onwards). External customers can find this guidance at http://www.hmrc.gov.uk/manuals/cgmanual/CG37830.htm.

It can be for a minor, unmarried child of the settlor. Section 629 ITTOIA (TSEM4300) may apply.

Trustees may use a deed to exercise their statutory powers of advancement. The deed is not strictly necessary. Trustees’ powers of advancement are contained in Section 32 Trustee Act 1925 for England and Wales. The equivalent in Northern Ireland is Section 33 Trustee Act (Northern Ireland) 1958. There is no equivalent in Scotland.