Trust Registration Service - Rules extension and deadline
Changes in trust registration requirements - act now!
Did you know that you have until September 1st 2022 to register a trust with the Government’s Trust registration Service (TRS), even if you previously didn’t have to?
Until recently, only thrusts that had a UK tax liability, had to register. This included off-shore trusts, but where they still had a UK tax liability. Now, all Express Trusts need to be registered.
Recent changes in Trust Registration Requirements
The new requirements to register a trust were introduced in 2020. Those trusts created on or before October 6 2020, have until September 1 2022 to register or be faced with a fixed penalty fine of £100 or up to 5% of any tax due (or £300, whichever is greater).
Trusts created after this date must be registered within 90 days of creation.
It is estimated that because of this change, there may be around one million trusts in the UK that are still to be registered before the September 1st deadline.
What trusts now need to be registered?
The Government instructs that the the following types of trust now need to register:
- All UK express trusts — unless they are specifically excluded
- Non-UK express trusts, like trusts that:
- acquire land or property in the UK
- have at least one trustee resident in the UK and enter into a ‘business relationship’ within the UK
By way of example, trusts that now require registration include those where:
1. A trust holds an offshore or onshore investment that was set up by a financial advisor. Most commonly these include:
- discounted gift trusts
- loan trusts
- gift and loan trusts
2. Property is held and a beneficiary exists but where there was no taxable income or capital gains and therefore no need, up to now, to register with HMRC.
3. Trusts that hold shares in a private company. This includes:
- a trading company,
- a family investment company (FIC)
- a personal investment company (PIC)
4. Any other trusts that hold other assets where a tax liability has not arisen.
Trusts that do not have to be registered.
While the extension of the TRS requirements covers many trusts that previously didn’t have to register, there are a number that remain exempt. A full list of exemptions can be found on the Government’s ‘register a trust page’ here. Remember, that this only applies if the trust is not liable to UK taxes.
How Tax Agility can help
While you can do this yourself through your own Government Gateway account, it’s really important that you get it right the first time. Mistakes in any reporting to HMRC can be very costly. This is why Tax Agility offers a simple service to ensure your Trust is reported correctly. First, we will make sure your trust isn’t exempt. Then we will ensure the correct information is reported through the TPS service and that it is up to date - another requirement, even if you have previously registered your trust.
Contact Tax Agility today on 020 8108 0090 and enlist our assistance in registering your Trust - time is running out.
Inheritance Tax (IHT) Guide to Completing Forms
When you’re acting as a personal representative for the estate of a deceased person (often a spouse, parent, or older relative) you can save yourself a lot of time by using this short guide that explains what forms you’ll need to complete, depending on your unique situation.
In this capacity you’ll be known as the executor if you’re working with a valid Will, or an administrator if the deceased person had no Will, or their Will is deemed invalid.
Grant of Representation
The Grant of Representation is a certificate with the names of the personal representative(s) of the case, along with a document that you, as a personal representative, are using as evidence of your entitlement to act as the executor/administrator of the deceased person’s estate.
Which Inheritance Tax (IHT) Forms?
The number of forms you’ll have to fill in as the estate’s executor/administrator will depend entirely on whether or not there is IHT to pay and, if no IHT is due, how easily you can prove this.
Forms IHT205 and IHT217
If there is no IHT to pay you only need to fill in form IHT205. There’s no IHT due if the value of the estate is below the £325,000 (2016-17) threshold, or if its full value if left to a charity or a community amateur sports club.
If the individual who died had a spouse or civil partner who didn’t use any or part of their IHT threshold, you can transfer up to 100% of it, thus making it possible for an estate worth up to £650,000 (2016-17) to be IHT exempt. In this situation you’ll need to complete form IHT217 alongside IHT205, and send it in with any supporting evidence.
Form IHT400
If there is IHT to pay you need to fill in form IHT400, along with a number of supplementary pages (forms IHT401-430) depending on the details of the deceased person’s estate. These supplementary forms can all be found on this page (scroll down until you reach the ‘supplementary pages’ heading).
In certain cases estates with no IHT to pay will be required to fill in form IHT400, along with a number of supplementary pages, if certain conditions can’t be met within form IHT205. If you believe the estate you’re a personal representative of owes no IHT, we strongly recommend you read form IHT205 all the way through before you begin filling it in.
Regardless of what forms you’re sending in, they must be received by HM Revenue and Customs (HMRC) “within a year of the end of the month the person died,” or you risk receiving a penalty.
Experienced Inheritance Tax Accountants
To speak with a professional accountant to discuss which inheritance tax forms you need to complete if you’re a personal representative of an estate, or for anything else, contact us today on 020 8780 2349 or get in touch with us via our contact page to arrange a complimentary, no obligation meeting.
New £500,000 Inheritance Tax Threshold from 2017
Chancellor of the Exchequer George Osborne announced during the emergency (summer) Budget earlier this month that the current Inheritance Tax threshold is set to increase from 2017, adding an extra £175,000 allowance per-person on homes left to children or grandchildren.
This figure will be added to the current tax-free threshold of £325,000, for a total per-person, tax-free allowance of £500,000. As both allowances are transferable between your spouse or partner (should you die before your spouse or partner, they will receive your allowance on top of their own), if you choose to pass your home down to your children or grandchildren from 2017 you’ll be able to pass on up to £1 million free from Inheritance Tax.
Speaking at the House of Commons on 8 July, Mr. Osborne said:
“The wish to pass something on to your children is about the most basic, human and natural aspiration there is. Inheritance tax was designed to be paid by the very rich. Yet today there are more families pulled into the inheritance tax net than ever before – and the number is set to double over the next five years. It’s not fair and we will act.”
Tax Rate to Remain
Under the new rules, estates valued between £1-2 million will pay tax at 40 percent over the £1 million mark, or the £500,000 mark for single parents or grandparents if their spouse or partner used their allowance previously, or didn’t pass their unused allowance on to them.
It should be noted that the new £500,000 per-person threshold will ‘taper’ away for estates worth more than £2 million. With that said, should you choose to downsize your home you won’t lose your tax-free allowance from your previous property.
Current Inheritance Tax System
Under the current system, individuals receive a tax-free threshold of £325,000, with spouses and partners being able to combine their allowances. The only difference between the current system and the new one, due to be phased in in 2017, is the new system adds an extra £175,000 allowance per person, thus increasing it to £500,000.
The original £325,000 threshold is fixed until the end of the 2020-21 tax year, after which there is potential for its renegotiation.
In its current form, Britain has some of the strictest Inheritance Tax rates in the developed world, with The Telegraph reporting that a parent splitting their £1 million estate (£800,000 property, £200,000 cash) between two children currently results in a £270,000 tax bill. Under the new system, this bill will reduce to £200,000 in the same scenario, making it lower than the Inheritance Tax paid on an equivalent inheritance in both France and Japan.
More Information on Inheritance Tax Threshold
To speak with a professional accountant to discuss what the new Inheritance Tax threshold means for you, your property, and those you wish to inherit it, contact us today on 020 8780 2349 or get in touch with us via our contact page to arrange a complimentary, no-obligation meeting.
Inheritance Tax Numbers Expected to Double
There is expected to be a sharp rise in the number of estates affected by the controversial inheritance tax (IHT).
Experts have warned that the number of estates expected to be caught by inheritance tax is likely to double by 2016/17 – from 21,000 in 2012, to an expected 42,000 in 2017.
Read more
Estate planning, wills and trusts
People tend to avoid thinking about it, but death is an inevitable force of nature that will affect us all. Thankfully, with a bit of estate planning we can mitigate the financial and legal complications that occur when we pass on, allowing our legacy to be retained or for our property and assets to be passed to those whom we have chosen.