HMRC's latest Trusts and Estates newsletter contains some useful information. Here is our enhanced version.
Response to the first Office of Tax Simplification’s review of Inheritance Tax
The government has responded to the Office of Tax Simplification’s (OTS) Inheritance Tax Review – first report: Overview of the tax and dealing with administration.
Inheritance Tax (IHT) reporting requirements
On 23 March 2021, the government announced changes to be made to Inheritance Tax reporting requirements for non-taxpaying estates.
- From 1 January 2022 most non-taxpaying estates will no longer have to complete IHT forms for deaths where probate or confirmation is required.
- The requirement for estates to submit an IHT account where the deceased was never Domiciled in the UK but owned indirect interests in UK residential property will be clarified.
- The temporary provisions for those dealing with a trust or estate to provide an IHT return without a physical signature have been made permanent.
Summary of responses to The Taxation of Trusts: A review
On 23 March 2021, the government published a response to the consultation 'The Taxation of Trusts: A Review'. The consultation responses did not indicate a desire for a comprehensive reform of trusts at this stage. The government will keep the issues raised under review.
Trust Registration Service (TRS) update
In preparation for opening the Trust Registration Service to non-taxable trusts for registrations in Summer 2021, HMRC have made changes to the service.
Taxable trusts are now required to provide additional data to confirm if:
- The trust is or is not an express trust.
- A non-UK trust has a business relationship in the UK.
- The trust has purchased any UK land or property.
- The trust has a controlling interest in a non-EEA company (and if so, provide company details).
Additional data about the individuals involved in the trust can now be provided:
- Country of residence and nationality.
- If the person has mental capacity at the time of registration.
HMRC have also made some changes to how they check if individuals’ names, National Insurance number and date of birth are correct. The details are checked upon input and users have three attempts to input the correct details. After three attempts, they will be asked for alternate details instead e.g. name, address, passport number, expiry date, country of issue.
It is now also possible to get a PDF output from the service to demonstrate proof of registration.
From 17 May 2021, HMRC started inviting non-taxable trusts to register and make changes to their trust details.
- Use of this service is currently only available on a limited basis to invitees to allow for service development and enhancement.
- If you have a non-taxable trust and are willing to participate in this initial registration period, contact:
- The full service will be publicly available for all customers in late Summer 2021.
Technical manual published
On 17 May 2021, HMRC published the Trust Registration Service manual which aims to provide detailed, technical information, building on the guidance already available.
It contains information on areas such as registration requirements, information required to register and data retention. Additional material on deadlines, penalties and third-party information sharing provisions will be added in due course.
Trusts and Estates with small amounts of savings income
- In 2016, HMRC introduced an interim arrangement so that trustees or personal representatives do not have to submit returns or make payments, where the only source of income is savings interest and the tax liability is below £100.
- This has been extended to include the 2021 to 2022 and 2022 to 2023 tax years and HMRC will continue to review the situation long term.
See UK Trusts
Useful guides on this topic
Trust Registration Service
What is the Trust Registration Service? What trusts does it apply to? What are the requirements and deadlines?
What is a trust? What types of trust are there? How are UK trusts taxed?
When is a trust non-resident? What are the UK tax implications of a non-resident trust? What are the UK tax implications for any beneficiaries? What are the UK administrative requirements for a non-resident trust?