Family Trust HMRC registration

in_my_wellies

meldrew70 said:

This is a nightmare! Received letter from the Prudential to say we had to set up a trust by 1st September or face penalties. PRU say they will not help or advise and to contact solicitor or Financial Adviser. So far, FOUR F.A's have failed to return calls or say they can't do this as they're not an "organisation". Have registered as an individual on Government Gateway but you can't register as an organisation. Phoned HMRC helpline without success - they're going to send out a leaflet. What are we supposed to do???

At first I didn't read it properly and tried to register as an individual (I AM an individual!!) But then I read it properly, on about page 2 it gives 3 options:

Individual

Includes personal tax account, tax credits, Self Assessment and Child Benefit

Organisation

Includes limited companies, partnerships, charities, trusts and estates

Agent

Includes accountants acting on behalf of clients, payroll bureau and bookkeepers

Once I opted for Organisation it let me continue

https://www.gov.uk/guidance/register-a-trust-as-a-trustee

whizzywoo

@in_my_wellies
Many thanks for this info.
I also tried to do it myself, both as an individual and using my Agent's account.
Now I know it can be done I shall get on with it tomorrow. 
Cheers 

KevCan86

Yeah in the end we have just done it ourselves and saved what would have been £600 lawyer fees. Scandalous lol

whizzywoo

KevCan86 said:

Yeah in the end we have just done it ourselves and saved what would have been £600 lawyer fees. Scandalous lol

Yeah I did the Trust from my deceased Mother's Will today as well.  Quite easy to be honest and no fees to pay.

getmore4less

whizzywoo said:

I too have recently come across the legislation. 

My Mother left half of her house to her children.  My Stepfather owns the other half but has a lifetime interest to live in the house until his death. 

I assume that this the sort of trust which needs to be registered?

They were not married, although lived as man and wife for over 30 years.

Going to speak to my Stepfather about this and suggest that we need to see his solicitor to find out.  They have not contacted him concerning the trust.

Depending on the value that can result in extra IHT.

As he has a full beneficial interest in the property the full value applies to his estate.

there are no transferable nil rate bands from your mother

on his death no residential nil rate band  as you don't qualify as step children. 

whizzywoo

getmore4less said:

whizzywoo said:

I too have recently come across the legislation. 

My Mother left half of her house to her children.  My Stepfather owns the other half but has a lifetime interest to live in the house until his death. 

I assume that this the sort of trust which needs to be registered?

They were not married, although lived as man and wife for over 30 years.

Going to speak to my Stepfather about this and suggest that we need to see his solicitor to find out.  They have not contacted him concerning the trust.

Depending on the value that can result in extra IHT.

As he has a full beneficial interest in the property the full value applies to his estate.

there are no transferable nil rate bands from your mother

on his death no residential nil rate band  as you don't qualify as step children. 

Yes this is information we have now taken on board.   Unfortunately the house is likely to exceed the £325,000 threshold. 

  It will probably not exceed the £500,000 residential nil band.  But as we are not legally stepchildren we will not be able to use it.

It's very unfortunate that their solicitor did not point out the inheritance tax pitfalls when the joint wills were written.   I think that they would have seriously considered getting married if they had known.   Although I don't think that the residential nil rate band existed in 2014.

My siblings and I had been under the impression that only my Stepfather's share would be subject to Inheritance tax.   And that there would possibly just be Capital Gains Tax on my Mother’s half, to reflect any increase in value since she died.

At no time did the solicitor explain that because the survivor of them would have full beneficial interest, the full value of the house would be used for Inheritance tax purposes.