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HMRC To Widen Exemptions For Small Trusts And Estates

It'll mean more will not pay tax ...

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Posted by Helen Beaumont on 15/06/2022 @ 8:00AM

HMRC has proposed to widen the legislation that will keep small trusts and estates from paying tax via self-assessment. However, any benefits for trusts may be offset by the latest Trust Registration Service (TRS) requirements ...

For straightforward estates of the main residence and some modest savings or investment, it is likely to be quite beneficial!

For straightforward estates of the main residence and some modest savings or investment, it is likely to be quite beneficial!

copyright: nattanan23 / pixabay

Since we had a shakeup of taxation of interest and dividends a number of years ago, a consequence for small estates and trusts was that they found themselves needing to complete tax returns as tax liabilities were not collected at source.

This meant HMRC introduced a limited, non-statutory exemption for trusts and estates with an income tax liability less than £100 from interest!

HMRC has been consulting on legislation to broaden this arrangement to increase this to a de minimis amount of bank interest, dividends and land and property income. This will be useful for small total receipts. The de minimis amount has yet to be confirmed, but I believe it will be around the £500 mark, so as long as you keep an eye on it over time, this will be very beneficial.

For straightforward estates of the main residence and some modest savings or investment, it is likely to be quite beneficial, though the proposals do have a cliff edge, where breaching the de minimis threshold means tax is due on the full £500+ even if it's just £1. It is still much easier to understand.

There won't be many low-income trusts that can benefit from these changes, but even if that is the case, converting non-statutory concessions into legislation will provide certainty.

However, there is a greater concern with the looming deadline for TRS registrations. Originally, only trusts that paid certain taxes needed to be registered, however, trusts that didn't pay tax as they only had a liability of less than £100 on interest may now be included.

"Was your trust in existence on the
6th of October 2020?"

If so, it needs to be on the register by the 1st of September 2022 unless it is covered by one of the many complex exclusions. It is onerous to decide if you need to register, so I'm happy to advise if you need to understand the best way forward.

Until next time ...



Would you like to know more?

If anything I've written in this blog post resonates with you and you'd like to discover more about HMRC's proposals, then do give me a call on 01908 774323 and let's see how I can help you.

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About Helen Beaumont ...


Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist.

Tax Planning can make a considerable difference to your tax liability. Helen has specialist knowledge and experience in tax planning and uses every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance.

When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.