Guidance

HMRC Trusts and Estates Newsletter: May 2021

Updated 28 August 2024

Welcome to the May 2021 edition of the HMRC Trusts and Estates Newsletter.

We do not have a mailing list for the newsletter.

Response to the first Office of Tax Simplification’s review of Inheritance Tax

On 23 March 2021 the government responded to the Office of Tax Simplification’s (OTS) Inheritance Tax Review – first report: Overview of the tax and dealing with administration.

Read a copy of the government response to the first OTS Inheritance Tax review.

Inheritance Tax reporting requirements

On 23 March 2021 the government 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. Guidance will be updated in due course. This means that going forward customers are able to 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.

Read a copy of the command paper that announced these changes.

Summary of responses to The Taxation of Trusts: A review

On 23 March 2021, the government published a response to the consultation The Taxation of Trusts: A Review, which closed on 28 February 2019. The consultation set out the principles for taxing trusts and sought views and evidence on reform in line with those principles. The government received just over 100 written responses from a variety of stakeholders. Responses came primarily from representative bodies, advisers, trustees and users of trusts, with a smaller proportion being submitted by non-governmental organisations and individuals.

The responses did not indicate a desire for comprehensive reform of trusts at this stage. The government will keep the issues raised under review.

Find out more information about the summary of responses.

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)

Users 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).

It is now also possible to get a PDF output from the service to demonstrate proof of registration.

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.

If you have a non-taxable trust and are willing to participate in this initial registration period, contact: service_team17.digital_ddcn@digital.hmrc.gov.uk.

Your request will be logged and HMRC may contact you with an invitation.

As this is a limited service only at this stage, we ask that you do not contact the Trusts helpline in relation to registration of a non-taxable trust during this period. The full service will then be available on a public basis for all customers at a later point in Summer 2021.

Technical manual published

On 17 May 2021, HMRC published the Trust Registration Service manual. This manual aims to provide detailed, technical information, building on the Trust Registration extension – an overview already available. This manual may be of interest to trustees, agents, personal representatives and organisations classed as ‘relevant persons’ under the Money Laundering Regulations.

The Trust Registration Service manual contains information on a number of areas such as registration requirements, information required to register and data retention. Additional material on subjects including deadlines, penalties and third-party information sharing provisions will be added to the manual in due course.

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 has been subsequently extended, see the Trust and Estate Newsletters April 2017 and August 2019. The arrangement has now been further extended to include the 2021 to 2022 and 2022 to 2023 tax years.

HMRC will continue to review the situation longer term.