Trust & Estate form SA900 2025 Change to box Q9A??

Anthear

Hi - in previous tax years the Trust that I am a Trustee for has had Box Q9A with a nil rate band of £1,000.  This year 'Box Q9A not in use' which has meant that all of the interest earned by the Trust is taxed at 45%!

I have Googled, but not found an explanation for this change.  Can anyone explain it please?  Many thanks

poseidon1

Anthear said:

Hi - in previous tax years the Trust that I am a Trustee for has had Box Q9A with a nil rate band of £1,000.  This year 'Box Q9A not in use' which has meant that all of the interest earned by the Trust is taxed at 45%!

I have Googled, but not found an explanation for this change.  Can anyone explain it please?  Many thanks

Evidently you did not Google the correct question

https://www.mills-reeve.com/publications/trustee-update-may-2024/#:~:text=From 6 April 2024 the,All other income – 45%

I see from a previous post you administer 2 discretionary trusts for your children. If they are responsible adults, any reason to keep the trusts going on their behalf, especially if they are still only worth around £150k  collectively?

 If you had invested for medium term growth running costs, compliance and tax are perhaps justifiable but not if you have remained in cash.

Anthear

poseidon1 said:

Anthear said:

Hi - in previous tax years the Trust that I am a Trustee for has had Box Q9A with a nil rate band of £1,000.  This year 'Box Q9A not in use' which has meant that all of the interest earned by the Trust is taxed at 45%!

I have Googled, but not found an explanation for this change.  Can anyone explain it please?  Many thanks

Evidently you did not Google the correct question

https://www.mills-reeve.com/publications/trustee-update-may-2024/#:~:text=From 6 April 2024 the,All other income – 45%

I see from a previous post you administer 2 discretionary trusts for your children. If they are responsible adults, any reason to keep the trusts going on their behalf, especially if they are still only worth around £150k  collectively?

 If you had invested for medium term growth running costs, compliance and tax are perhaps justifiable but not if you have remained in cash.

Thank you for the link - I now understand.  Interesting you suggest winding the trusts up - I did so earlier this year.  I would challenge your point about medium term investment - funds were previously invested and with advice fee, platform charge and advisor fee, the returns were pretty comparable with cash.

poseidon1

Anthear said:

poseidon1 said:

Anthear said:

Hi - in previous tax years the Trust that I am a Trustee for has had Box Q9A with a nil rate band of £1,000.  This year 'Box Q9A not in use' which has meant that all of the interest earned by the Trust is taxed at 45%!

I have Googled, but not found an explanation for this change.  Can anyone explain it please?  Many thanks

Evidently you did not Google the correct question

https://www.mills-reeve.com/publications/trustee-update-may-2024/#:~:text=From 6 April 2024 the,All other income – 45%

I see from a previous post you administer 2 discretionary trusts for your children. If they are responsible adults, any reason to keep the trusts going on their behalf, especially if they are still only worth around £150k  collectively?

 If you had invested for medium term growth running costs, compliance and tax are perhaps justifiable but not if you have remained in cash.

Thank you for the link - I now understand.  Interesting you suggest winding the trusts up - I did so earlier this year.  I would challenge your point about medium term investment - funds were previously invested and with advice fee, platform charge and advisor fee, the returns were pretty comparable with cash.

I did say medium term ( 5 to 7 years). I understand your trusts only commenced back in 2023?

However, if you were incurring advisor fees along with their selected platform fees, a £150k trust investment really not enough to justify the burden. At that modest level I would DIY but then I am appropriately qualified to do so. 

My own view re newly created discretionary trusts is they need to be upwards of £250k + in value to justify their exsistence and costs related thereto.

Probably just as well you bit the bullet and wound up your entities. 

Depending on the quantum of tax you end up paying, don't forget your children can recover part or all, depending on their respective personal tax bands. If a relatively small amount however, might not be worth the hassle of R40 (m) tax refund forms on their behalf.

Also a percentage of the advisor and platform fees can be offset against the taxable divs/interest if released to your trustee bank account  as they arise - 10% to 15% of such fees would not be unreasonable.

Anthear

No they were set up in 2015
yes they do claim the tax back on form R40