Corporation Tax Act 2009 section 1258A

Bare trusts

Section 1258A explains how partnership interests held through bare trusts are treated, so that the beneficiary behind the trust is regarded as the partner for tax purposes.

• Where a partner holds their partnership interest as a trustee for a beneficiary who is absolutely entitled to that partner's share of the firm's profits, the beneficiary is treated as the partner.
• The beneficiary must be chargeable to tax on the partnership profits in question for this treatment to apply.
• For the purposes of Part 17 of the Corporation Tax Act 2009, references to a partner or member of the firm include the beneficiary of such a bare trust.
• This ensures that the tax rules look through the bare trust arrangement and apply directly to the person who actually benefits from the partnership profits.