Income Tax (Trading and Other Income) Act 2005 section 848A

Bare trusts

Section 848A deals with the treatment of beneficiaries under bare trusts where a partner in a firm holds their partnership interest as trustee for a beneficiary who is absolutely entitled to the partner's share of the firm's profits.

• Where a partner holds their partnership interest as trustee under a bare trust, the beneficiary who is absolutely entitled to the partner's share of profits is treated as a partner in the firm.
• The beneficiary must be chargeable to tax on the partner's share of the firm's profits for this provision to apply.
• All references to a partner or member of the firm in Part 9 of the Act are extended to include the beneficiary.
• The effect is that the beneficiary steps into the shoes of the trustee-partner for tax purposes, ensuring that obligations and entitlements under Part 9 apply directly to the beneficiary.