HMRC's latest Trusts and Estates newsletter contains some useful information. Here is our enhanced version.
Agent Toolkits
- HMRC have 19 agent toolkits for trustees and personal representatives to download and use.
- Refreshed versions of both the main Trusts and Estates toolkit hand supplementary Capital Gains Tax for Trusts and Estates toolkit were published in April 2019, and of the Inheritance Tax (IHT) toolkit in June 2019.
Trust Registration Service
Micro Service Development
The first feature for the Trust Registration Service (TRS) that allows users to register a Will Trust is now live. It contains details of:
- A lead trustee (can include multiple UK-based trustees).
- Multiple named individual beneficiaries (will only require Name, Date of Birth, National Insurance Number or Address).
- Classes of beneficiary.
- Assets (money, property and land).
Further features will be delivered between now and the end of the year.
If you are interested in taking part in User Research for the TRS or if you have any questions, contact:
Protecting your data – authorising an agency to act on behalf of a trust for the Register
Later in 2019 HMRC will be releasing more functionality to the TRS to allow amendments to be made.
- Agents and their clients will need to complete a few additional steps to ensure only those with a legitimate reason can access and update details on TRS.
- This will not replace the existing 64-8 process for Self-Assessment, so agents must ensure the appropriate authorisation is in place where needed.
The process for each relevant party to follow to enable authorisation will be:
- Agent
- wants to act on behalf of a trust or update the register
- logs in to Agent Services account
- enters trust Unique Taxpayer Reference (UTR)
- HMRC Agent Services
- checks agent’s relationship to trust
- if no relationship exists, a link is created for the agent to email to their client
- Agent
- emails client with link (the link is to the invitation which the client needs to accept)
- Lead Trustee
- lead Trustee clicks on link from agent
- logs in to Government Gateway account (may have to set up Organisation Credentials first)
- completes random known fact check about the trust
- invite accepted
- HMRC
- agent: Trust relationship now created for Trust Register
- agent can now access trust data and update register as necessary
See UK Trusts
Fifth Anti-Money Laundering Directive (5AMLD) Update
The government is developing its approach to the implementation of 5AMLD in 2020 and held a consultation, setting out the requirements and key issues. HM Treasury and HMRC are now reviewing the responses.
Trusts and Estates Allowance
Making tax easier for trusts and estates with small amounts of savings income
In 2016 HMRC introduced an interim arrangement so trustees or personal representatives do not have to submit returns, or make payments under informal arrangements, where the only source of income is savings interest and the tax liability is below £100.
These arrangements have been extended to include the 2019/20 to 2020/21 tax years. See UK Trusts
Publication of Lifetime Gifting Research
In May 2019, HMRC published a research report entitled ‘Lifetime Gifting: Reliefs, Exemptions, and Behaviours’. The research explored the incidence of gifting in the general population, how it varied between different groups, the nature of gifting, the number and value of gifts given, whom they were given to, the motivations for doing so and awareness of Inheritance Tax rules and exemptions.
Office of Tax Simplification Review into Inheritance Tax – Part 2
In 2018, the Chancellor commissioned the Office of Tax Simplification (OTS) to conduct a review into Inheritance. Two reports were produced; the first was published in November 2018 and focused on administrative issues, the second report was published in July 2019 and focused on broader policy and technical issues. The Government is now considering the recommendations carefully.
Inheritance Tax – IHT421 Agent Update
HMRC has recently updated the Inheritance Tax (IHT) process surrounding the Probate Summary form IHT421.
- Agents who are using the statement of truth process to submit their probate applications, via Probate Online or by using forms PA1A or PA1P, can now ask HMRC to send the IHT421 directly to the Probate Registry or Courts and Tribunal Service Centre (CTSC).
- This will allow agents to submit probate applications at the same time as their IHT accounts.
- Agents who do not use the statement of truth process and instead submit an oath are unable to use this service and the IHT421 will be posted back to them in the normal way.
Administration Period of Deceased’s estate: Income Tax and Capital Gains Tax
Informal Payment Arrangements
The Trusts & Estates newsletter of August 2018 provided guidance for using informal arrangements for non-complex estates and confirmed what action HMRC takes on receipt of a calculation of the tax due from the Personal Representatives.
- This included a payment slip being issued with a unique payment reference to enable the Personal Representative to pay HMRC the tax due for the Deceased’s estate administration period only.
- HMRC are currently receiving payments which include the lifetime reference or which have no reference.
- Any payment made using the informal arrangements for the Income Tax and/or CGT due for the Administration Period should only be made using the unique payment reference provided or there may be delays in the payment being matched against the tax due and/or the payment may be allocated against any other tax liability due.
- Late payment of the tax due may result in the informal arrangement facility for the estate being withdrawn.
Complex Estates: Online registration
An estate is considered complex if one or more of the following conditions are met:
- the probate or confirmation value of the estate is more than £2.5 million
- Income Tax and/or Capital Gains Tax due for the whole of the administration period exceeds £10,000
- the proceeds of assets sold by the Personal Representative in any one tax year for date of deaths up to 5 April 2016 exceeds £250,000, or £500,000 for deaths after 6 April 2016.
Where the estate is considered complex:
- Personal Representatives must report their income and gains to HMRC under self- assessment and complete Trust and Estates tax returns for each year of the administration period.
- To submit a self-assessment tax return the Personal Representative needs a Unique Taxpayer Reference (UTR).
- This is obtained by registering the estate online through the Trust Registration Service.
There have been issues on estates being registered due to the online completion fields being over populated or incorrectly completed. This has resulted in notifications of UTR or self-assessment returns for the estate being addressed to the Deceased or posted to a building of an agent rather than direclyt to the Personal Representatives.
To rectify the problems and ensure all correspondence is issued correctly from HMRC systems after online registration:
- The registration service will limit the number of characters that can be used; personal representatives should ensure the words ‘Estate of’ is included to prevent items being posted using the deceased’s name e.g. ‘Estate of Mr A N Other (Deceased)’.
- The estate correspondence address should be the Executor’s/Personal Representative’s address and not the agents address.
- If the agent is a named Executor, the company name and business address should be included in the estate address field. Omitting the company name at the address field may result in items of post being returned to HMRC undelivered.
Agent Authorisation
HMRC require the Personal Representative to provide authority to communicate with an accountant, tax agent or adviser acting on the personal representative’s behalf using form 64-8.The agent simply registering online for a UTR for the estate on behalf of the Personal Representatives without putting a 64-8 in place is not enough for HMRC to discuss or communicate the estate tax affairs with the agent.
Draft Legislation Released On L-Day
Draft legislation published on 11 July 2019 included the following measures:
- The IHT treatment of trusts and settlements depends on the domicile of the settlor and the situs of the assets. When assets were added to a settlement after a non-domiciled settlor becomes UK-domiciled, there was some doubt about the treatment of those additions and transfers between trusts. A measure was announced to clarify the position.
- Payments received by, or due to, the original survivors from the Kindertransport Fund are relieved from Inheritance Tax.
- Income Tax, IHT and CGT exemption for payments made under the Windrush Compensation Scheme.
- The legislation will also include a provision for a new power to exempt payments from Income Tax, IHT and CGT where appropriate for any future compensation schemes.
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