Unlike conventional trusts, which are taxed at a flat rate of tax, a special trust is taxed on the same sliding scale applicable to natural persons. For tax purposes the following types of special trusts are recognised:

Special Trust Type A:

A trust created solely for the maintenance and care of a person with a mental illness (as defined in the Mental Health Care Act) or any serious physical disability which precludes them from earning income or managing their own affairs. Special Trust Type-A trusts can be testamentary or inter vivos trusts and are sometimes created as a result of a court order in favour of a specified natural person.

Special Trust Type B:

This is a testamentary trust created by a testator by or in terms of their will solely for the maintenance and care of their relatives who are alive on the date of death of the deceased (including any beneficiary who has been conceived but not yet born on that date). The youngest of the relatives should be under the age of eighteen years. A trust will cease to be a Type-B trust as from the beginning of a year of assessment in which the youngest of its beneficiaries turns eighteen. The distinction between a Type-A trust and a Type-B trust is important because a Type-A trust qualifies for certain relief from Capital Gains Tax while a Type-B trust does not qualify for such relief.