The CIOT has broadly welcomed HMRC’s consultation on extending the concession which removes low-income trusts and estates from income tax, but cautions that trusts should be able to elect out of the regime where necessary. Key points include:
Extending the current concession to cover all forms of income will benefit personal representatives (PRs) of many estates with small amounts of income and will remove an administrative burden both for PRs and HMRC.
Basing the de minimis amount on an amount of income rather than on the tax liability is a sensible simplification, saving PRs or trustees from having to calculate the tax – although the amount of the de minimis cap should either be indexed or reviewed regularly.
HMRC should consider allowing trustees to elect out of the scheme on a year-by-year basis, to relieve administrative burdens for trusts whose income usually falls above the de minimis amount but which occasionally fall within the concession. This could be of particular importance for payments out of discretionary trusts.
Any new scheme must be clear and accessible for lay trustees and personal representatives, given trusts and estates with very low levels of income are less likely to have professional advisers.
The CIOT has broadly welcomed HMRC’s consultation on extending the concession which removes low-income trusts and estates from income tax, but cautions that trusts should be able to elect out of the regime where necessary. Key points include:
Extending the current concession to cover all forms of income will benefit personal representatives (PRs) of many estates with small amounts of income and will remove an administrative burden both for PRs and HMRC.
Basing the de minimis amount on an amount of income rather than on the tax liability is a sensible simplification, saving PRs or trustees from having to calculate the tax – although the amount of the de minimis cap should either be indexed or reviewed regularly.
HMRC should consider allowing trustees to elect out of the scheme on a year-by-year basis, to relieve administrative burdens for trusts whose income usually falls above the de minimis amount but which occasionally fall within the concession. This could be of particular importance for payments out of discretionary trusts.
Any new scheme must be clear and accessible for lay trustees and personal representatives, given trusts and estates with very low levels of income are less likely to have professional advisers.
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