What’s happening at Nottingham?
Trusts & estates are supposed to be a sleepy area of the law – at least that is what those outside looking in like to think. Those of us working in this field know otherwise, even without the ‘Panama Papers’.
What’s in a name?
For example, the Capital Taxes office has long since dropped that mantle in favour of calling itself Trusts and Estates (despite that many still refer to it as the CTO!) but now that name has gone. It is now to be known as Inheritance Tax, Trusts and Pensions or ITTP for short. The former officer in charge of trusts, Juliet Roche, will take over as ITTP’s new Head.
Royal Mail and no DX
The new ITTP service will no longer be using the DX postal system so from 1 April 2016 you will have any DX mail returned. You must now use the Royal Mail when communicating with ITTP.
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IHT online project
The IHT online initiative was all going well then of course the Government brought in the residential nil rate band legislation so the back end of the software has to be re-configured. It is looking likely that the service will go live now in 2017.
The impact of the Personal Savings Allowance on trusts and estates
When changes are made to simplify income tax for individuals there are usually knock-on effects on trusts and estates which do not seem to be fully thought through. The introduction of the Personal Savings Allowance (PSA) of £5,000 per annum for individuals to enable interest to be paid gross without tax deducted at source is such an example.
In theory, the PSA is a welcome simplification but in practice it raises the prospect of lots of small trusts with low income and estates using informal payments having to file a tax return. This is because trustees and personal representatives do not benefit from the PSA yet banks, building societies and NS & I will be paying their interest gross from 6 April 2016.
To avoid a deluges of extra tax returns HMRC have confirmed that for 2016/17 it will not require notification from trustees or personal representatives dealing with estates in administration where the only source of income is savings interest and the tax liability is below £100. HMRC are currently reviewing the situation longer term and will notify key customers before 2017/18 tax year as to what the new arrangements might be.
Article 31 of 4th AML Directive
The UK has to put in place a trust register by April 2017 as a result of this directive. It will be a private register accessible only to revenue authorities. HMRC are currently designing the format and it will be a new online Trust Registration Service.
Watch this space for further developments as to what information about our trust clients we will be obliged to keep and share on the new system.
I sit on HMRC’s Agent Advisory Group from which the above items arose. The next meeting of the Group is in September 2016. Do let me know by email if there is anything you would like me to raise.
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