Summary of the Trusts (Capital and Income) Bill
The Bill is based substantially on a draft bill prepared by the Law Commission and is following the special procedure which applies to Law Commission bills.
The Bill deals with technical matters relating to trust law where trustees have to distinguish between capital and income in their management of the trust property. It would make changes to the current law in three areas and would deal with:
- technical rules requiring apportionment between capital and income
- the classification of shares received by trustees on a tax-exempt corporate demerger (whether direct or indirect)
- investment by charity trustees on a 'total return' basis.
The Bill would extend to England and Wales.
The proposed reforms contained within the Bill are designed to:
- simplify and modernise trust law rules that create unnecessary expense, litigation and difficulty to trustees of both private and charitable trusts
- decrease the regulatory burden on the Charity Commission and
- facilitate total return investment by charities.
The reforms are intended to be tax-neutral and have the support of the Opposition and of professional groups including the Law Society, the Trust Law Committee, the Society of Trusts and Estates Practitioners, and the Charity Law Association.
House of Commons Library analysis
The House of Commons Library produces briefing papers to inform MPs of key issues. The papers contain factual information and a range of opinions on each subject, and aim to be politically impartial.
The Library published briefing papers before second reading and after committee stage.
Progress of the Trusts (Capital and Income) Bill [HL]
The Trusts (Capital and Income) Bill [HL] was introduced in the House of Lords on 29 February 2012 under the House of Lords procedure for Law Commission Bills, and was carried over to the 2012–13 Session. No amendments were made to the Bill by the House of Lords.
The Bill completed its passage through the Lords on 23 October 2012 and was introduced into the House of Commons on the same day.
Under Standing Order No. 59, Law Commission Bills are automatically referred to a Second Reading Committee. The Bill was considered by a Second Reading Committee on 5 November 2012 and had its formal Second Reading (without debate) on 6 November 2012.
It was considered by a Public Bill Committee at a single sitting on 13 November 2012. No amendments had been tabled and there was no disagreement to any of the clauses. The Bill was reported without amendment.
The Bill passed report stage in the Commons with no amendments. It will now wait for Royal Assent.
Keep up to date with all the proceedings and documentation, including amendment papers, on the Trusts (Capital and Income) Bill and find out how a bill becomes an Act of Parliament.
What are report stage and third reading of a bill?
The report stage gives MPs an opportunity, on the floor of the House, to consider further amendments (proposals for change) to a Bill which has been examined in a public bill committee.
There is no set time period between the end of committee stage and the start of the report stage.
What happens at report stage?
All MPs may speak and vote, for lengthy or complex Bills the debates may be spread over several days. All MPs can suggest amendments to the Bill or new clauses (parts) they think should be added.
What happens after report stage?
Report stage is usually followed immediately by debate on the Bill's third reading.
What happens at third reading?
Debate on the Bill is usually short, and limited to what is actually in the Bill, rather than, as at second reading, what might have been included. Amendments (proposals for change) cannot be made to a Bill at third reading in the Commons.
At the end of the debate, the House decides (votes on) whether to approve the third reading of the Bill.
What happens after third reading?
If the Bill started in the Commons it goes to the House of Lords for its first reading. In the case of the Trusts (Capital and Income) Bill, because it started in the House of Lords and no amendments were made, it will now wait for Royal Assent.
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