HMRC's latest Trusts and Estates newsletter contains some useful information. Here is our enhanced version.

Agent toolkits

Toolkits helpful to agents completing trusts and estates returns:

Charitable bequests: Acceptances in Lieu and the 36% Rate of IHT

An IHT rate of 36% applies where 10% or more of the relevant component(s) of an estate pass to charity.

  • Currently, where an offer of property in lieu of the tax arising on such an estate is made

s33(2ZA) IHTA prevents the use of the 36% rate in calculating the tax credit (the ‘special price’) available.

  • To ensure that the 36% rate can apply, the amount of tax added back to arrive at the special price in appropriate cases will be increased from 25% to 32.5% for objects, and from 10% to 19% for land. This will produce the same result as if the 36% rate had been used in the special price calculation.
  • The revised rates will apply only to offers of property in lieu of tax where a rate of 36% is applicable to an estate and the property being offered originates from that estate.

IHT relief: discount for charitable bequests

Office of Tax Simplification Review into Inheritance Tax

In 2018, the Chancellor commissioned the Office of Tax Simplification (OTS) to conduct a review into IHT. Due to unprecedented interest from members of the public, the OTS decided to produce two reports. The second of these is expected later this year.

See First report by OTS into inheritance tax

Technical Changes to Residence Nil Rate Band

At Budget 2018, the government announced minor technical amendments to Residence Nil Rate Band (RNRB) relating to downsizing provisions and the definition of ‘inherited’ for RNRB purposes. The changes were passed as part of Finance Act 2019, and have effect for deaths occurring on or after 29 October 2018.

See Main Residence Nil Rate band (RNRB)

New style of probate grant

In March 2019, HM Courts and Tribunals Service (HMCTS) introduced a new style of probate grant adding more counter-fraud measures, including:

  • a hologram
  • a digital seal instead of an embossed seal
  • a digital signature instead of a ‘wet’ signature
  • a telephone number for people processing the document to check its validity

The old-style grant remains valid.

You will no longer receive a copy of the Will with the grant; if you require a copy please contact the Probate Registry.

Trust Registration Service – Ongoing development of the current service

During 2019, HMRC will develop and deliver various functions to enable changes to be made in the Trust Register. They will:

  • Replace the existing iForm which allows users to register a Trust or Estate.
  • Deliver additional functions, which will allow users to:
  • view the data submitted at registration
  • complete a declaration when there is no change to registered data
  • make changes to registered data to keep the register up to date
  • close a Trust or Estate

If you are interested in taking part in User Research or testing or if you have any questions, contact: This email address is being protected from spambots. You need JavaScript enabled to view it..

See UK trusts

Trust Registration Service - Consultation on the Fifth Anti-Money Laundering Directive

The government is currently developing its approach to the implementation of the EU’s Fifth Anti-Money Laundering Directive (5AMLD) and has published a consultation which includes a chapter on the implications of 5AMLD for the Trust Registration Service (TRS). The main differences between the current requirements under 4AMLD and the new requirements under 5AMLD for trusts are:

  • All express trusts will need to register, not just those who are liable to pay tax.
  • New data sharing requirements which mean information on the register may be disclosed by HMRC to anyone who can prove they have a ‘legitimate interest’ in seeing it for anti-money laundering purposes and where there is a UK trust which owns or has control over a non-EU company
  • Trustees will have to prove their registration on TRS with certain businesses who are obliged to carry out due diligence checks when there is a new business relationship between them and a person acting as a trustee.

The consultation is published on gov.uk: ‘Transposition of the Fifth Money Laundering Directive

Trust Customer Experience Journey

In March 2019, HMRC began reviewing the customer experience journey and life event ‘I have become a trustee’. This follows the review of the Inheritance Tax journey in 2018.

The review includes the development of an ‘As Is’ journey to highlight where any problems and confusion occur and opportunities to improve HMRC processes and the customer experience.

HMRC are keen to hear feedback from subject matter experts and ask for views about the existing process to be sent to This email address is being protected from spambots. You need JavaScript enabled to view it. by 10 May 2019.

Changes to Entrepreneurs’ Relief Rules

The Finance Act 2019 introduced a series of changes to the Entrepreneurs’ Relief rules:

  • From 6 April 2019, the qualifying period throughout which various conditions must be met to qualify for entrepreneurs’ relief has been extended from 1 year to 2 years.
  • The definition of a ‘personal company’ has been changed from 29 October 2018, so that the individual or qualifying beneficiary must have:
    • Entitlement to at least 5% of the distributable profits and 5% of the assets on a winding up of the company or
    • Entitlement to at least 5% of the proceeds in the event of a disposal of the whole of the ordinary share capital of the company

From 6 April 2019 individuals whose shares have been diluted below the required 5% shareholding in a company can:

  • elect to be treated as if they have disposed of and reacquired their shareholding at market value, resulting in a gain on which ER may be claimed
  • make a further election to defer the gain until an actual disposal of the shares.

See Entrepreneurs' Relief: disposal of trust business assets

External link:

HMRC Trusts and Estates Newsletter: April 2019


 

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