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Hold-Over Relief Liability Insurance
Key benefits

What the policy covers
Issue Risk Insurance

Contingent Survivorship Insurance

Breach of Trust Insurance

Pension Fund Run-off Trustee Insurance
Hold-Over Relief Liability Insurance

Discretionary trusts and certain other property trusts are beginning to see a revival in tax planning subsequent to the Finance Act 2006.

CGT hold-over relief is available to beneficiaries of discretionary trusts and some other relevant property trusts until they dispose of the asset under the Taxation of Chargeable Gains Act 1992 section 260(3), but tax rules allow for the relief to be clawed back if the beneficiary becomes non-UK resident within six years following the end of the tax year of receipt.

If HMRC cannot obtain repayment of the crystallised tax liability from the beneficiary, a claim can be made against the trustee. If there are no funds or insufficient funds available in the trust, the trustee would be personally liable.

Hold-Over Relief Liability Insurance allows the trustee to make payments or gifts out of the trust to beneficiaries free of concern for any contingent personal liability to repay the relief to HMRC should the occasion arise.


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Key benefits
  • Upon payment of a one-off premium cover is provided until the period during which a possible liability could arise has expired
  • Removes the risk to trustees of personal liability for claims arising out of the manage­ment of a discretionary trust where the trustee wishes to make gifts or payments out of the trust but has no personal knowledge as to whether the beneficiary intends to reside overseas within the next six years

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What the policy covers

  • Any monies owed to HMRC in respect of crystallised CGT liability, not recoverable either from the beneficiary who has become non-UK resident or out of the trust itself, and for which the trustee would otherwise become personally liable
  • Any other costs and expenses incurred with the prior consent of the Insurer


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