Trusts and Estates Update

HMRC recently issued a general Trusts and Estates update. The key points were as follows:

Inheritance Tax Reporting

The government have announced that later this year changes will be made to the Inheritance Tax reporting requirements for non-taxpaying estates. These changes mean that from 1 January 2022 most non-taxpaying estates will no longer have to complete Inheritance Tax forms for deaths where probate or confirmation is required.

The Inheritance Tax reporting requirements will also be updated to clarify the requirement for estates to submit an Inheritance Tax account where the deceased was never domiciled in the UK but owned indirect interests in UK residential property.

Additionally, the temporary provisions for those dealing with a trust or estate to provide an Inheritance Tax return without requiring physical signatures from all those involved has now been made permanent. HMRC say that guidance will be updated in due course. This means that going forward, customers can continue to deal with Inheritance Tax returns in the same manner they have during the pandemic, with declarations being made by one person in place of signatures.

Trust Registration Service 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

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)

You can also supply additional data about the individuals involved in the trust. Information can also be provided about:

  • country of residence
  • country of nationality
  • if the person has mental capacity at the time of registration

The register your trust guidance has been updated to include information about the additional data.

HMRC have also made some changes to the way in which they check individuals’ names, National Insurance number and date of birth are correct. The details are checked upon input and service users are given 3 attempts to input the correct details. After 3 attempts, service users will be asked for alternate details instead (name, address, passport number, expiry date, country of issue).

Non-taxable trusts

From 17 May 2021, HMRC started inviting non-taxable trusts to register and make changes to their trust details.

Use of this service is only available on a limited basis at this stage, to allow for service development and enhancement, and therefore will only be accessible to those who have been directly invited to use the service.

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 under informal arrangements, where the only source of income is savings interest and the tax liability is below £100.

The arrangement was subsequently extended and has now been further extended to include the 2021 to 2022 and 2022 to 2023 tax years. HMRC say that they will continue to review the situation longer term.