Client has a bare trust capital was used to buy some properties. Income generated is put on clients tax return - property income pages. My understanding is that the capital is not taken into account when assessing for means tested state benefits but the income generated from the properties will be. Can anyone confirm the above
many thanks
Jonathan
Replies (7)
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A bare trust merely holds an asset with no beneficial ownership. The capital remains the sole property of your client - its just like looking through a net curtain.
Any means testing I assume follows the usual rules where they either look at actual income, or a deemed income based on the capital.
Are you sure he understands what a bare trust is? It is unusual to say the least for a bare trust to endure very long.
Personal injury trust?
You need to see the trust deed urgently, identify the source of the funds which created the trust, and the surrounding circumstances.
The impression you are now giving is that of an injury settlement being invested to provide for your clients future needs which could actually be a vulnerable persons trust.
Whilst a deed may allow her to pay for a carer this is not a tax deductible expense. It might also preclude a claim for carers allowance or associated benefits.
However, paying someone to manage/maintain the properties might qualify for tax relief.
once you have more information we might be able to help
I have googled ( I do hate that phrase! ) and found confirmation that it could be a bare trust. All income and gains from a bare trust are declared on the beneficial owners tax return as if the trust was not there. You do not use trust pages.
I remain unconvinced on the benefits front.
As a result you claim expenses for tax purposes in the usual manner.
i.e. no expenses can be claimed. against interest, property income expenses do not include providing a carer