Estates and trusts created by a will
An estate and/ or a trust(s) created by a will may need to be registered on HMRC’s Trust Registration Service (TRS).
Personal representatives’ and trustees’ responsibilities
Personal representatives of an estate and the trustees of a trust(s) created in a will have different requirements as to when the estate or the trust may need to be registered on theTrust Registration Service. Whilst these are set out in HMRC’s TRS Manual, this blog seeks to provide a simple explanation as to when personal representatives and/ or trustees may need to take action to ensure that the estate and/ or trusts are correctly registered. If further detail is required, please refer to the TRS Manual or feel free to contact us.
Personal representatives are known as executors where the deceased had a valid will at the date of death. If a valid will did not exist, the laws of intestacy apply to determine the destination of the deceased’s estate and the personal representatives are known as the administrators.
Personal representatives are required to submit an SA900 Trust & Estate tax return to HMRC if there is chargeable income or gains to report and any of the following applies:
- the total of income tax and capital gains tax due for the period of administration exceeds £10,000;
- the value of the estate was more than £2.5 million at the date of the deceased’s death; and/ or
- the value of the estate sold by the deceased’s personal representatives in any one tax year exceeds £500,000 (£250,000 where the date of death was before 6 April 2016).
If one or more of the above conditions apply, the estate is known as a complex estate.
The TRS is now the only route for the personal representatives of a complex estate to obtain a UTR (unique taxpayer reference) that is required to submit an SA900 Trust & Estate tax return. The estate must be registered by the 5 October following the end of the tax year in which
Estates that are not complex estates
The personal representatives of an estate that is not a complex estate are not required to register the estate on the TRS unless either:
- the estate remains in administration 2 years after the date of the deceased’s death; or
- the administration of the estate has been completed but some or all of the estate assets have not been distributed to the beneficiaries of the estate 2 years after the date of the deceased’s death.
Should either of the above apply, the executors should register the estate on the TRS.
Informal payment procedures
If an estate is not a complex estate but income tax and/ or capital gains tax liabilities of less than £10,000 have arisen during the period of administration, the personal representatives can make an informal payment of the total tax liability to HMRC.This can be done by writing to HMRC and:
- setting out the amounts of income tax and/ or capital gains tax due;
- the name, address, National Insurance number and UTR of the deceased; and
- the personal representatives’ names and contact details.
If the estate has a total income tax liability of less than £100 (in 2023-24) which has arisen from interest, or a total income tax liability of less than £500 in 2024-25 onwards, this income tax liability does not need to be reported. If the liability exceeds these limits, the whole liability must be reported.
If some or all of the capital gain arose from the disposal of residential property, this still needs to be reported via the capital gains tax on UK property service within 60 days of the date of the sale.
Submitting SA900 Trust & Estate tax returns
An SA900 Trust & Estate tax return can be submitted to HMRC as a paper form by 31 October following the end of the tax year for which the tax liabilities are being reported. Any SA900 tax returns submitted after the 31 October need to be submitted electronically using third party software (which may need be purchased). HMRC provides a list of commercial software suppliers. They will not make a recommendation for any particular software package that should be used so personal representatives or trustees should do their own research from the list to identify the most appropriate product..
Registering the estate
Personal representatives can register an estate once they have created an organisational government gateway account. If registering directly, no fee is payable.
The personal representatives may also choose to appoint an agent, such as a solicitor or accountant to register the estate.
Trusts created within a will
A trust created by a will qualifies as an excluded trust, and is not required to be registered on the TRS for 2 years after the deceased’s date of death provided that:
- the trust only holds assets from the deceased’s estate; and
- the trust does not incur a UK tax liability (income tax, capital gains tax, inheritance tax, stamp duty land tax (SDLT), land transaction tax (LTT) in in Wales, land and buildings transaction tax (LBTT) in Scotland and/ or stamp duty reserve tax (SDRT).
If either of the above conditions are not met, or the trust remains in existence 2 years after the date of death of the deceased, the trustees are required to register the trust on the TRS. If registering directly, no fee is payable.
Trustee Support Services can register the trust on behalf of the trustees for a fee of, currently, £200 + VAT. Our process for trust registration is set out on our website along with more information on the TRS and useful information for trustees.
The trustees may also choose to appoint an agent, such as a solicitor or accountant to register the trust.