Key facts
- Trusts pay CGT at a flat rate of 24% on all gains (no basic-rate band).
- The Annual Exempt Amount for most trusts is £1,500 for 2025/26 (half the individual amount).
- If a settlor has created multiple trusts, the £1,500 is divided equally between them (minimum £300 per trust).
- Personal representatives of a deceased estate get the full £3,000 AEA for the tax year of death and the following two tax years.
- There is no CGT on death itself — assets pass to the estate at market value (probate value).
CGT and Trusts: Overview
A trust is a legal arrangement where trustees hold assets on behalf of beneficiaries. For CGT purposes, the trustees are treated as a single body that is separate from both the settlor and the beneficiaries. When trustees dispose of trust assets, CGT is charged on the trustees.[2]
The main types of trust and their CGT treatment are:
| Trust Type | CGT Treatment |
|---|---|
| Bare trust / nominee | Transparent — the beneficiary is treated as making the disposal and uses their own rates and AEA |
| Interest in possession trust | Trustees pay CGT at 24% with the trust’s AEA (£1,500) |
| Discretionary trust | Trustees pay CGT at 24% with the trust’s AEA (£1,500) |
| Accumulation trust | Trustees pay CGT at 24% with the trust’s AEA (£1,500) |
CGT Rates for Trusts
Trustees pay CGT at a flat rate of 24% on all chargeable gains. Unlike individuals, trusts do not have a basic-rate band — all gains above the AEA are charged at the higher rate.[1]
The exception is Business Asset Disposal Relief (BADR), which can reduce the rate to 10% if the trust disposal meets the qualifying conditions (for example, disposing of shares in a qualifying trading company where a beneficiary with a life interest meets the personal company requirements).
Rate changes: Before 30 October 2024, the CGT rate for trusts was 20% on non-property assets and 28% on residential property. From 30 October 2024, a single rate of 24% applies to all trust disposals, regardless of asset type.[1]
Annual Exempt Amount for Trusts
The AEA for trusts is half the individual amount. For 2025/26, this is:[3]
| Scenario | AEA (2025/26) |
|---|---|
| Individual | £3,000 |
| Single trust (one settlor, one trust) | £1,500 |
| Two trusts from the same settlor | £750 each |
| Five trusts from the same settlor | £300 each (minimum) |
| Ten trusts from the same settlor | £300 each (minimum floor applies) |
The minimum AEA per trust is one-tenth of the individual AEA — £300 for 2025/26. If there are more than 5 trusts from the same settlor, each trust receives £300 regardless.
Bare Trusts
Bare trusts (and nominee arrangements) are transparent for CGT purposes. The beneficiary is treated as the beneficial owner and as making the disposal directly. This means:
- The beneficiary uses their own CGT rate (18% or 24%)
- The beneficiary uses their own AEA (£3,000)
- The trust does not receive a separate AEA
Transfers Into a Trust
When assets are transferred into a trust, this is a disposal by the settlor for CGT purposes. The treatment depends on the type of trust:[5]
- Bare trust: No gain/no loss transfer (the settlor retains the beneficial interest through the beneficiary)
- Interest in possession or discretionary trust: Disposal at market value, but holdover relief (s.260 TCGA 1992) may be available to defer the gain
With holdover relief, the gain is “held over” — the trustees acquire the asset at the settlor’s base cost (reduced by any gain not held over). The gain is deferred until the trustees dispose of the asset.
Transfers Out of a Trust to Beneficiaries
When trustees transfer assets to a beneficiary (an “appointment” or “advancement”), this is treated as a disposal by the trustees at market value. However, holdover relief is normally available:[5]
- A joint election is made by the trustees and the beneficiary
- The beneficiary receives the asset at the trustees’ base cost (the gain is held over)
- When the beneficiary eventually sells the asset, they pay CGT on the full gain from the original base cost
Tip: Holdover relief on transfers out of trust is a valuable tool for deferring CGT. However, it means the beneficiary inherits a potentially large latent gain. Consider the beneficiary’s own tax position before making the election.
CGT for Deceased Estates
When someone dies, there are specific CGT rules for the administration of their estate:[4]
No CGT on Death
Death is not a disposal for CGT purposes. Assets pass to the deceased’s estate at their market value on the date of death (the probate value). This “free uplift” effectively wipes out any unrealised gain that existed during the deceased’s lifetime.
The Administration Period
Personal representatives (executors or administrators) may need to sell assets during the administration period. If they sell an asset for more than its probate value, CGT arises on the difference.
| Feature | Detail |
|---|---|
| CGT rate | 24% (flat rate, no basic-rate band) |
| AEA: tax year of death | £3,000 (full individual amount) |
| AEA: year 2 after death | £3,000 |
| AEA: year 3 after death | £3,000 |
| AEA: year 4 onwards | Nil |
| Reporting | Trust and estate tax return (SA900) |
Transfers to Beneficiaries from an Estate
When personal representatives transfer an asset to a beneficiary as part of the estate distribution, this is not a disposal. The beneficiary acquires the asset at its probate value (the market value at death). Any subsequent disposal by the beneficiary is measured against this probate value base cost.
Reporting Requirements
Trusts
Trustees report CGT on the trust and estate tax return (SA900), which is filed annually. The filing deadline is 31 January after the end of the tax year. If the trust disposes of UK residential property, the trustees must also file a 60-day CGT property return.[3]
Deceased Estates
Personal representatives file the SA900 for each tax year of the administration period. If they sell UK residential property during the administration period, they must file a 60-day return in the same way as trustees.
Informal estates: If the estate is small and straightforward (the “informal” procedure applies), the personal representatives may report any capital gains on the deceased’s final Self Assessment return or by writing to HMRC, rather than filing a full SA900.[4]
Frequently Asked Questions
What rate of CGT do trusts pay?
Trusts pay CGT at a flat 24% on all chargeable gains. Unlike individuals, trusts do not benefit from a basic-rate band, so there is no 18% rate for trusts. Business Asset Disposal Relief (BADR) at 10% can apply to trust disposals if the qualifying conditions are met.
What is the Annual Exempt Amount for trusts?
For 2025/26, the AEA for most trusts is £1,500 (half the individual £3,000 amount). If the same settlor has created multiple trusts, this £1,500 is shared equally between them, subject to a minimum of £300 per trust. Bare trusts do not receive a separate AEA — they use the beneficiary’s exemption.
Is there CGT when someone dies?
No. Death is not a disposal for CGT purposes. Assets pass to the deceased’s estate at their market value on the date of death (probate value). This market value becomes the base cost for the personal representatives or beneficiaries. Any unrealised gain in the deceased’s lifetime is effectively wiped out.
How do personal representatives report CGT?
Personal representatives report CGT on a trust and estate tax return (SA900). They have the full individual AEA (£3,000 for 2025/26) for the tax year of death and the following two tax years. After that, there is no AEA. They pay CGT at the flat rate of 24%.
Further Reading
- CGT Rates (2025/26) — full rate tables including trust rates
- Annual Exempt Amount — how the AEA works for individuals and trusts
- Holdover Relief (Gift Relief) — deferring CGT on transfers into and out of trusts
- CGT on Inherited Property — what happens when you sell inherited assets
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