Briefing Note - Finance Bill 2013 – Draft Clauses - Heritage Maintenance Funds

The Government announced at Budget 2012 that it would aim to introduce a measure in Finance Bill 2013 to remove an unintended double income tax charge on income reimbursed to beneficiaries of heritage maintenance funds (HMF)

The double income tax charge applies because the trustees are liable to income tax, on the income generated within the HMF and the owner-beneficiary of the actual heritage property is taxed when receiving a reimbursement from the HMF. The effective tax rate on the reimbursed income could be as high as 75%.

The unintentional, but not uncommon, circumstances where a double charge to income tax would arise were:

• the beneficiary (who was also the settlor of the HMF) operated a trade or rental business from the heritage property (usually a house opening business);