Trust and Estate Tax Return (SA900)

harlequin55

I am hoping that someone can advise me as to the circumstances in which it is necessary to complete SA900 relating to may late father in-laws estate. My understanding is that if non of the following criteria apply then it is not necessary and any tax due by the estate can be dealt with through "informal arrangements".

1. Income tax and capital gains tax due is greater than £10,000.
2. The estate value exceeds £2.5M
3. Estate assets sold are greater than £500,000

None of the above apply to the estate. However, the Solicitor, in whom confidence has diminished considerably on account of errors and omissions during the Administration of the estate, is saying that because income during the process from investments and rental exceeds £10,000, form SA900 must be completed and submitted to HMRC. Are they correct?

poseidon1

You are correct it is the total income and capital gains tax payable during the estate admistration period that must exceed £10k before a formal SA900 becomes necessary.

However, do you have an ascertainable date for the end of the estate administration period? Ie has the rental property been assented in favour of the beneficiaries entitled thereto, and have investments  been sold and/or transferred out? 

If you don't  have a termination date for the estate administration, then you do not have a basis for submitting the informal return, since by doing so you are stating all aspects of estate administration is complete but for the submission of this final informal return and settlement of tax declared therein.

 Is this  perhaps where the difference between you and the solicitor lies, ie the estate administration remains ongoing ( for whatever reason)? 

harlequin55

Thank you for your helpful response. The estate is really straight forward where my wife is the only beneficiary. A property has been transferred into her name and paperwork has been completed and submitted to Land Registry. A date for effective transfer has been agreed; all other assets have been gathered and invoices against the estate have been settled. I assume that that date can mark the end of the Administration period? Income tax due after that date will be the responsibility of the beneficiary. It would seem therefore that the informal approach for reporting income and ax due is sufficient.

poseidon1

harlequin55 said:

Thank you for your helpful response. The estate is really straight forward where my wife is the only beneficiary. A property has been transferred into her name and paperwork has been completed and submitted to Land Registry. A date for effective transfer has been agreed; all other assets have been gathered and invoices against the estate have been settled. I assume that that date can mark the end of the Administration period? Income tax due after that date will be the responsibility of the beneficiary. It would seem therefore that the informal approach for reporting income and ax due is sufficient.

If you have a definitive date then use that to calculate the various taxes due during the administration period for the purposes of the letter. Are you or your wife executors? Is this task something you feel happy to undertake without further involvement of the solicitor?

However, don't overlook the fact that income you declare for the administration period and upon which estate tax is paid, must also be declared by your wife for the tax year concerned, in addition to her other personal sources of income. She will of course receive a credit for tax paid at estate level, but maybe pushed into higher rate, if not already holding that tax status.

Does your wife already self assess and therefore familiar with the process? If she is now a new landlord as a result of her inheritance, self assessment for landlords can sometimes be challenging.