Hi all
Hoping someone can help me on this.
The deceased’s Will left “as to one share for X if living at my death and shall reach the age of 21 years”
X is now 21 and was under 18 when the deceased died. X was the deceased’s grandson.
Since the money was invested there has been c£3k of gross interest. How is the income taxed during this period?
The deceased also left the same to Y (granddaughter) and she turned 21 before I had conduct of the file. When paying out to Y, the solicitor at the time advised that it was a bare trust and therefore Y was responsible for accounting to the revenue for any income tax due… Is this correct?!
Any help would be appreciated.
Thank you!
Any advice would be appreciated
Happy New Year NT11!
You will appreciate that many tax practitioners have their heads down at this particular time of year, completely overwhelmed with tax returns.
As an accountant I do not comment on the legal position, but it does not appear to me that any bare trust(s) could not have existed until the relevant beneficiary attained 21. Until that point the Will Trustees should have accounted to HMRC annually for any tax due on interest earned at 20%.
Depending on the exact terms of the Will Trust, any net income arising if not distributed may have been accreted to capital and thus on attaining 21 the beneficiary did not receive any income, only capital.
Was the Will Trust registered on the Trust Register and if so, as a taxable or non taxable trust? if registered as non-taxable, who registered it and what were the reasons why they did that?
Maxine
TC CItroen Wells
Hi Max
Happy New Year to you, too.
Thanks for your reply. Would the tax returns only be needed between 18 to 21 years? or from the start of the trust? There are no other provisions in the Will.
Many thanks
Hi NT11
Trust returns would have been due from whenever the Estate administration ceased and the trust was effectively constituted, if taxable interest income was arising. If the money had been sat in a current account or other non-interest bearing account, or recently when interest rates were very low and there was no interest earned, there would not be a problem, however since interest rates have risen significantly this has recently become more problematic.
Maxine