Now that the 2016/17 Trust & Estate Tax Return has been released, I have a question regarding the reporting for those IIPs that have historically received dividend and interest income which was taxed at source. My worry here is that the changes for 2016/17 will throw all of these IIPs into Self Assessment.
These Trusts could previously tick the box saying all UK income has been taxed at source and request future Tax Returns are not issued. However, this will no longer be the case, so does this mean they will all now have to request a 2016/17 Tax Return is issued?
I recall STEP raising this issue with HMRC, but unfortunately I cannot find any further correspondence in this respect.
Is anyone aware of any developments or answers?
HMRC Trusts and Estates advised in their April 2016 newsletter that they will not require notification from trustees or personal representatives dealing with estates in administration if the only source of income is savings interest and the tax liability is below £100.
An article in Taxation on 26 October 2016 noted that this relaxation does not appear to apply if tax arises due to dividend income.
That’s good. The solicitor has to do the sums to ascertain whether the tax liability is below £100. If it is the estate must pay for his time in any case. If it isn’t, a tax return has to be submitted.
Julian Cohen, Solicitor
In relation to the £100 deminimus my view is that this applies where the trust or the estate is not registered for self-assessment, whereas if the taxpayer (sorry customer) is already registered for self-assessment then a return must be completed and lodged and the income tax paid, despite the only source of income being interest and the amount being below £100. Is that how others see it?
I fail to see any logic to restricting this relaxation to interest only cases so that, for example, dividend income £10, interest £10, hence tax liability £2.75 register and complete a return whereas interest £90, tax liability, £18 no need to register.
Adams & Co (Ilkley) Ltd