NATIONAL GOVERNMENT INCREASE THE TRUST TAX RATE FROM 33% TO 39%. In late November 2023 the National led coalition government was formed and they quickly got onto the job of putting in place some of their tax policy.

Welcome to 2024 – no doubt another busy tax year

In late November 2023 the National led coalition government was formed and they quickly got onto the job of putting in place some of their tax policy.

What is of particular interest to me is that prior to the election Labour had announced an increase in the trust tax rate from 33% to 39% from 1 April 2024. National’s position on this was surprisingly silent during the election campaign.

When Parliament was dissolved for the election Labour's tax Bill, proposing the increase in the trust rate, lapsed.

On 6 December a motion to reinstate the business from the last Parliament was agreed to and this included a reintroduction of the Taxation (Annual Rates for 2023 – 24 Multinational Tax and Remedial Matters) Bill. This bill increases the trustee tax rate of 33% were 39%.

So while it has gone unsaid through the election campaign a National Government will increase the trust tax rate from 33 to 39%. Not surprisingly a headline they have been keen to avoid.

For clients with trusts some planning may be required once the Bill is passed, however it is very likely this will be close to 31 March so planning may have to occur in anticipation of the Bill passing. In particular companies which have retained earnings, where shareholdings are held in trusts, may want to consider if a dividend prior to 31 March is appropriate so that those dividends are taxed at the old trust rate of 33% rather than the new trust rate of 39%.