HMRC's latest Trusts and Estates newsletter contains some useful information. Here is our enhanced version.
Some of the items included in this update are also included in the Agent update August/September 2020. Rather than duplicate these we have linked to those updates where appropriate.
Fifth Anti-Money Laundering Directive (5MLD) and the extension of the Trust Registration Service (TRS) update
- A consultation was published on 24 January 2020, ‘Technical consultation: Fifth Money Laundering Directive and Trust Registration Service’ with responses published in July 2020.
- The associated regulations have been put before the European Statutory Instruments Committee and will go before Parliament later this year.
- You cannot register non-taxpaying trusts on the Trust Registration Service (TRS) yet as the government is still updating the IT system to meet the new requirements in the regulations.
- Guidance about when and how trustees will be able to register will be provided in due course. Trustees will then have until 10 March 2022 to comply with this requirement.
- Taxable trusts required to register on TRS under the current rules should continue to follow the existing TRS registration guidance and deadlines until advised otherwise by HMRC.
See Fifth EU Anti-Money Laundering Directive checklist
Volunteers needed
- HMRC are continuing to work on the development of the TRS IT system to accommodate the changes required by 5MLD including extending the functionality to register non-taxable trusts.
- HMRC are looking to speak to people who have set up a trust or are a trustee for a trust that is not liable to pay tax.
If you or anyone you know has a trust that falls into this category and you are interested in participating in user research, contact:
Registrations
- The original ‘iForm’ version of the TRS will no longer be accessible from 23 September 2020 and you will not be able to register a trust or estate using this version after this date.
- You should finish any partially completed registrations started on the original service before it becomes unavailable and start to use the new ‘micro-service’ version to register all types of taxable trust or ‘complex’ estates.
Updating trust details
You can now update details on TRS if any of the information about the trust given at registration changes and if the trust is liable to tax, including changes to the trustees, beneficiaries, settlor, protector or another individual who can control the trust. You do not need to update TRS with changes to the assets in the trust or their values at registration.
Now that the update functions are available on TRS you should make sure the details on the register are correct and that any changes to the persons associated with the trust since registration are reflected on the register.
Declaration
- You can now make an online declaration on the TRS to confirm that the details of the persons associated with the trust are accurate and up to date. You must do this even if there are no changes if the trustees are liable to pay one or more of the relevant taxes for any tax year.
- The relevant taxes are Income Tax, Capital Gains Tax (CGT), Inheritance Tax (IHT), Stamp Duty Land Tax (SDLT), Scottish Land and Buildings Transaction Tax and stamp duty reserve tax.
- If the trustees are not liable to pay tax in any tax year, you do not have to make the declaration until the trust becomes subject to tax again.
Deadlines
Changes to the details on the register (other than those relating to the trust assets), or confirmations that no changes are needed, must be made by:
- 31 January 2021 if the change occurred before 6 April 2020 (or there was no change) and the trustees were liable to tax for any of those tax years.
- 31 January 2022 if the change occurs in 2020-21 (or there is no change) and the trustees are liable to tax in that tax year.
If the trustees are not liable to pay relevant tax for a tax year, updating the TRS and confirming that there are no changes must be completed by 31 January after the end of the tax year in which they become liable to pay tax again.
Question 20 on the SA900 tax return
You must now use the TRS online service to tell HMRC about changes or confirm that there are none, instead of advising HMRC by letter or by making a note in the white space of the tax return.
- Tick box 20.1 on the return to confirm you have provided updated details or that you have confirmed on TRS that there have been no changes. Previous advice about leaving box 20.1 blank no longer applies.
Closing a trust
You can now note on TRS that a trust has ended. If the trust has come to an end, make sure this is reflected on the Trust Registration Service.
Agent authorisation
If you are an agent acting for a client, before you can view or change the details about the trust you gave at registration, you must have separate authorisation from your client as form 64-8 does not give you authority to use TRS on behalf of clients.
You and your client must set up the authorisation online as a one-off action involving a few simple steps.
HMRC are aware that some trustees and agents have had difficulties with the authorisation process.
Trustees may find the following helpful:
- You need a separate Government Gateway account with an organisation user ID and password for each trust that you manage.
- To set up a Government Gateway account go to the Manage your trust’s details page and select the ‘Start now’ link to access the correct Government Gateway portal then select the ‘create sign-in details’ and follow the instructions to get a user ID and set up a password.
- You will then need to ‘claim’ the trust by answering a few questions about it before your agent can create a link to the invitation that they email to you.
- You must select the link within seven days and accept the invitation to authorise your agent.
- Agents need to access their Agent Services Account using the ‘Start now’ link on the Manage your trust’s details page, not by the general Agent Services route.
Clients who genuinely cannot carry out this process digitally because, for example, they do not have access to a computer should contact the Trusts and Estates Helpline.
Complex estates
The facility to update the information provided at registration for ‘complex’ estates is available. This includes changes to the personal representative’s name, address and to close the estate record on TRS.
GOV.UK guidance changes
HMRC have made a number of changes to the GOV.UK pages on trust registration.
A new overview ‘When you must register a trust’ has been added to the Trusts and taxes guide. More details for agents and trustees on how to register a trust as well as guidance on managing the trust details can be found on GOV.UK.
Finance Bill 2020
On 22 July 2020 Finance Act 2020 received Royal Assent. The measures affecting Inheritance Tax (IHT) are in sections 73-75 and 102. See Finance Act 2020: Tax update & rolling planner 2020-21
Excluded property
Foreign assets in a trust are excluded from IHT if the settlor was not UK domiciled or deemed domiciled when the trust was made.
Legislation has been introduced to:
- Confirm HMRC’s existing view that the settlor’s domicile must be tested whenever assets are added to the trust and not just when the trust was first made.
- Provide that where assets are transferred between trusts, in order to be excluded from an IHT charge, the original settlor must be non-domiciled both when the trust was made and when the assets are transferred between the trusts.
See Non-domicile status, deemed domicile & tax
New reliefs for payments received under Compensation Schemes and other Schemes
- Relief from IHT is available in respect of payments received under the Windrush Compensation Scheme, Kindertransport Fund and The Troubles Permanent Disablement Payment Scheme if particular requirements are met.
Electronic submission of IHT400 and IHT100 forms
- A Dropbox facility for sending IHT400 and IHT100 accounts to HMRC was temporarily introduced to enable customers to continue to comply with their obligations during the COVID-19 restrictions.
- HMRC are currently processing accounts and dealing with post in line with published targets and therefore recommend that all customers who are able to file IHT accounts via the postal system should again do so.
- HMRC will now only issue a link to the Dropbox facility upon request and by exception, where the request outlines why a specific account cannot be submitted by post and will not be offering this facility for general filing in the foreseeable future.
See Trusts and Estates: What’s New? June 2020
New clearance letter and process
- HMRC are making changes to the current process for handling forms IHT30, ‘Application for a clearance certificate’. Instead of returning a stamped and signed copy of the form IHT30, they will send customers a letter to certify that HMRC discharge the applicants who have signed the form.
- Instead of a stamp, HMRC will use a unique authorisation code. The letter will have exactly the same effect as the stamped and signed IHT30.
Operational update
Despite continuing challenges presented by Coronavirus, operational areas in IHT and Trusts are currently meeting all key targets and processing post and new accounts within published turnaround times.
Confirmation of payee checks
See Agent update August/September 2020
Estates and Capital Gains Tax Disposals
- If a personal representative (PR) has disposed of UK residential property resulting in a Capital Gains Tax (CGT) liability they must report and pay the tax within 30 days of completion.
- This can be done via the new CGT payment on property disposals service if the disposal occurs before they are ready to finalise the estate’s tax affairs.
- If they are ready to finalise the estate’s tax affairs and pay any tax due, they can report and pay through the existing processes instead. This must still be done within 30 days by:
- Completing a Self Assessment return for the administration period if the estate meets the ‘complex estate’ criteria.
- Advising HMRC of the CGT due for the administration period through the ‘informal arrangements’ if it does not meet the complex estate criteria
- Estates do not have to have registered via the TRS to use the new CGT payment on property disposals service. If the personal representative already has a Unique Taxpayer Reference (UTR) for the estate, this can be used when using the CGT payment on property disposals Service. Where a ‘complex estate’ does not have a UTR, the PR will need to get one by registering on TRS.
See CGT: Payment of tax and Reporting capital gains: How to?
Agent toolkits, annual refresh 2020
See Agent update August/September 2020
Links
UK Trusts
A guide to UK trusts and how they are taxed.
Non-resident trusts
This guide considers the UK tax issues related to non-resident trusts and the pitfalls to watch out for.
IHT: Estate planning checklist
A checklist covering some essential points taxpayers should know when planning for their estate and inheritance tax.
External link
HMRC Trusts and Estates newsletter: August 2020