Mumsnet has not checked the qualifications of anyone posting here. Free legal advice is available from a Citizen's Advice Bureau, and the Law Society can supply a list of local solicitors.

Trust payment- need accountant?

(23 Posts)
Ffffffftttttttt Sat 30-Apr-16 17:12:47

I'm about to receive £10k from a trust my late father left. Am higher rate taxpayer on PAYE. Will I need to declare this for tax purposes or would it have already been taxed via executor? Executor not very helpful hence asking here. Do I need an accountant? Thanks.

Floppityflop Sat 30-Apr-16 17:17:50

We might need some more information to help you. But the executor should at least be able to tell you whether any tax has already been deducted. What HAVE they told you?

Floppityflop Sat 30-Apr-16 17:18:50

PS A call to the HMRC helpline will also help you but you need all the information first.

dontcallmethatyoucunt Sat 30-Apr-16 19:41:29

Yes that's a depends question. How long has the trust existed, what is the size of the trust, is this capital or income?

Ffffffftttttttt Sat 30-Apr-16 20:23:48

Thanks all. The trust was part of the will and has been in place for about 4 years. It's income from rents. I will ask the executor/trustee whether anything has already been deducted. information has been pretty non forthcoming so far.

Ffffffftttttttt Sat 30-Apr-16 20:24:40

It's a small trust.

cozietoesie Sat 30-Apr-16 21:14:56

I'd be seeking some legal advice on the matter of the trust - apart from anything else. (I don't much like this 'non-forthcoming' bit given a trustees' responsibilities to the beneficiaries of the trust.)

Floppityflop Sun 01-May-16 12:58:33

Obviously you will need to declare it on self-assessment, but it seems you are lacking some information that would enable you to determine exactly what box it should go in. It might be better to approach an accountant to help if you feel you need professional help. Is the trustee a professional or someone who is a bit clueless?

Floppityflop Sun 01-May-16 12:59:01

PS, look for an accountant who also has the STEP qualification if you can.

cozietoesie Sun 01-May-16 14:16:32

You seem very incurious about the terms of the trust and the position of the Trustee?

Floppityflop Sun 01-May-16 14:25:08

No, not at all, it will be important to understand the trust for the tax position, but it might be easier for a professional acting as OP's agent to deal with the trustee to obtain that information than for the OP to do it. I am interested in whether the trustee is a professional. If so, I would be reminding them of that fact and their obligations. If they aren't then it may help to have an accountant involved to check everything is being done properly. That's likely to be cheaper than a lawyer and if they think there's something wrong a lawyer could be involved at that stage. The difficult part will be identifying someone with the right expertise and who can deal with it at proportionate cost.

Floppityflop Sun 01-May-16 14:26:26

Have you seen trust accounts?

cozietoesie Sun 01-May-16 15:56:10

I'm sorry, Floppity. That remark was meant for the OP and not for you. smile

Floppityflop Sun 01-May-16 16:01:05

No worries!

dontcallmethatyoucunt Mon 02-May-16 18:35:51

If the income is rent it will have a tax credit attached to it (assuming the accountants have been correctly maintained). It's quite a complex area and very important to get correct; trusts are taxed at 45% on income. There are some complicating issues with retained income turning to capital, but it's beyond my area of speciality and I would use a trust accountant with my clients.

It would be normal for income streams to be allocated to save the complicated taxation calcs. The income can then be taxed on the beneficiary and not the trust.

What's the plan going forward?

Ffffffftttttttt Thu 05-May-16 17:47:47

It's a discretionary trust so I am told I have no rights to detailed accounts. I presume I'll get a cheque and nothing else. It's difficult as the trustee is a family member who is rather touchy. I'll ask them if/when it comes and will look for a trust accountant. Thanks all.

dontcallmethatyoucunt Thu 05-May-16 17:51:28

you do have rights to reasonable information though.

cozietoesie Thu 05-May-16 18:38:00

Have you seen the will and the trust provisions?

cozietoesie Thu 05-May-16 18:52:28

The reason I say that is that 'rents' implies capital assets and while I have no idea why your father set up a trust - there could be loads - you have the right, surely to make your dispositions eg in light of at least when the trust will end and on what basis the assets will be disbursed. If you have, or may have, dependants who need to be accounted for then even more so, I would have thought.

cozietoesie Fri 06-May-16 08:20:52

By the way - did you really mean a Discretionary Trust or did you mean an 'informal trust'? People do some strange things when they're framing wills and the latter would certainly present some issues.

Floppityflop Fri 06-May-16 11:24:24

You do have rights to accounts and so on as a beneficiary of a discretionary trust, certainly enough info to do your tax returns but you don't have the right to know why the trustee exercised their discretion in a certain way.

Ffffffftttttttt Mon 09-May-16 21:15:19

Thanks all, yes definitely discretionary.

londonmummy1966 Tue 17-May-16 13:15:07

Hi there OP - just seen this post so sorry not to have been more timely. The Trustee has to tell you what tax they have paid on this income see

www.gov.uk/trusts-taxes/trustees-tax-responsibilities

Ask them for a form R185 which again they have to give you. This sets out the amount distributed to you and the tax the trustees have paid on it.

You need to put it on your tax return but it may well lead to your being due a small repayment as the trust tax rate is higher than an individuals. If you file your own tax return you need to get hold of the trust income page and there is a box there for putting in the figures from the R185.

Also if the trust was actually set up by your father's will then you can get hold of a copy of this

Join the discussion

Join the discussion

Registering is free, easy, and means you can join in the discussion, get discounts, win prizes and lots more.

Register now