Tax

ATT welcomes proposals to simplify low income trust affairs

the government is now proposing to formalise this concession and widen it to allow estates or trusts with income of up to £500 from any source, which is equivalent to an income tax liability of £100 or less

In its response to a recent HMRC consultation, the Association of Taxation Technicians (ATT) is said to welcome the proposals to legislate a concession that can simplify the tax affairs for low income estates and trusts. 

An informal concession has been in place since 2016 that reportedly removes the burden of tax reporting from trusts that have small amounts of interest income and a resulting tax liability of less than £100. 

This is said to have been a useful concession as it helps to “reduce the administrative burdens” for the executors, beneficiaries and trustees of eligible trusts and estates.

However, the government is now proposing to formalise this concession and widen it to allow estates or trusts with income of up to £500 from any source, which is equivalent to an income tax liability of £100 or less, to also benefit from this simplification.

Senga Prior, chair of the ATT Technical Steering Group, said: “We welcome the proposal to put the existing concession onto a permanent footing and extend to other sources of income, including dividends. The proposed approach is simple for executors and trustees of low income estates or trusts to understand and apply in practice.

“The primary benefit will be for small estates, as it will in many cases avoid what would otherwise be a circular process in which the estate would be paying a small amount of tax which the beneficiaries can often claim back.”

She added: “The benefits for trusts are more limited and we expect that few trusts will benefit from the proposed changes. We would like to see HMRC revisit previous work on trust taxation, with a view to simplifying and reducing the administrative burden for small trusts.”

Show More
Back to top button
[class^="wpforms-"]
[class^="wpforms-"]