Client died 2016, Will creating a Trust for incapax son. PRs paid tax on the negligible interest and the significant dividend income arising during administration, and R185 completed. The income is due to the Trust. Including the interest is easy enough but where in the Trust Return should the dividend income go? I have read the guidance which advises box 9.10 but there’s no indication as to whether the gross or net figure should be entered there. If gross, the software thinks it hasn’t been taxed but if net, how do we get relief for the 7.5% tax paid by the PRs?
As far as I can see, I can’t just slip it in any other box because it won’t be assessed to tax at the correct rate. Or am I missing something really obvious…
Hopefully, practitioners out there will already have dealt with an Estate R185 for a trust since dividends became payable gross and can advise.
Thanks in anticipation.
Personally I would include it under ‘other income’ in boxes 9.17 9.18 & 9.19 with a note in the white space box 21.9 explaining the source and including the UTR under which the Estate returned the dividend income.
The trouble with putting it in Other income is that it would be taxed at 20%. I have completed a Tax Return putting the gross dividends in box 9.1, then putting the tax paid in the box for tax overpaid in a previous year (box 17.4) with a white space explanation. The tax calculation was correct.
Clearly, this isn’t correct but it was the only work around I could think of and the white space disclosure at least makes HMRC aware.
In the ones I have dealt like Katherine in entered the dividends in box 9.1 and white spaced the details of the tax already deducted and the correct tax payable. That has worked also but Katherine’s workaround might be better as it does at least allow the software to show the correct liability.
I had hoped that when the 2017.18 returns were issued there may have been a box added to deal with this as it appears to be an oversight.
Thanks for advice.
Since posting, I had decided that the only way for the system to tax at the correct rate and give credit for tax suffered was to put it in the foreign pages, with an explanation in the white space that it wasn’t foreign income! As least that way, it doesn’t require manual adjustment by anyone at HMRC…