Will I need to complete R185

Skint_yet_Again

I’ve been reading other threads about R185’s and beneficiaries being pushed over the tax threshold but I cannot find any instructions that show what income and when it must be put on a R185 form.

Estate is ISA’s, a small interest account (less than £100 interest per year) sale of car and sale of house (sale in progress half was trust / half share of deceased). There is not expected to be any CGT. There is not expected to be any income tax due (taxable income under £500) There was no IHT

Sorry I’m struggling with what the rules are around R185?

poseidon1

https://forums.moneysavingexpert.com/discussion/6657518/will-i-need-to-complete-r185

If there is no reportable and taxable estate income above the £500 annual de minimis, then there is no R185 reportable taxable income.

Annual estate income below the £500 annual reporting limit, accrues to the residuary beneficiaries 'tax free'.

In your scenario, the estate is unlikely to accrue income in excess of £500, unless you choose to place the 50% share of the house proceeds on interest bearing deposit for an appreciable period prior to eventually distributing the cash.

Skint_yet_Again

Thanks @poseidon1 so which 50% share? The trust ended when dad died as life tenant and I understood all the property was in his estate? Sorry I’m getting confused.

Can I ask the solicitor not to hold the proceeds of the sale and pay them immediately (minus their fee & estate agent fee) into the non-interest bearing executor account?

Skint_yet_Again

sorry just to add the solicitor is for conveyancing only. What about the other 50% ?

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/81905079#Comment_81905079

Its the estate half.

The trust half of the proceeds belongs absolutely to those beneficiaries and declared personally , so any income generated from that source has nothing to do with the estate and completely outside any estate accounting and tax compliance.

You can of course ask the solicitor if a non interest bearing option is possible for the estate cash although the interest rate on solicitor's client accounts tend to be extremely low.

However, then you would need to ensure you are ready to distribute to the residuary estate beneficiaries cash as soon as possible thereafter, so as not to be accused of unreasonable delay and financial loss if you choose not to place the monies on deposit in the interim.

Skint_yet_Again

Thank you. I understand most of that apart from

The trust half of the proceeds belongs absolutely to those beneficiaries and declared personally , so any income generated from that source has nothing to do with the estate and completely outside any estate accounting and tax compliance.

This was an ipdi trust on the death of my mum 8 years ago with dad as life tenant edit - and the only trustee.

The trust share has not been distributed to the beneficiaries yet and the deeds are still in my parents joint names as TIC. I understood the trust ended when dad died and went back into his estate for iht purposes

Are you saying each beneficiary will have to declare income from a trust even though the trust has ended? It has been registered and closed with HMRC as a non-taxable trust? Will each beneficiary be personally taxed on their share of the proceeds of the trust share. Or just taxed on any income / interest arising on it?

Sorry for so many questions it just that I thought the trust made that portion not taxable?

Skint_yet_Again

ok so I have read through my other thread and the explanation thanks @poseidon1 and I think I’ve got my head around this.

Taxable income to estate will be expected to be under £500 and will include 50% of any interest on the house sale monies whilst held by the conveyancing solicitor.

Taxable income to the remaindermen will be 50% of any interest on house sale monies to be declared individually- no R185 needed as not part of the estate

Hopefully I’ve got this correct. Thanks for your help.