Taxation and trust registration for discretionary trust

poseidon1

I won't comment on the net tax outcome on your father. HMRC will provide him ( or his executor) with a certificate detailing the quantum of any tax repayment repayable to trustees ( read the guidance!). From that refund either from him or his estate, you will reimburse direct to yourself and the bare trust as already advised.

As for the trust, it is a question of fact you terminated it on the date you executed the deed of appointment followed by the distribution of cash pursuant to that deed. This is not something I am prepared to argue with you any further.

You can accelerate the outstanding trust tax compliance ( if you really believe yourself capable) by manually altering a PDF paper copy of the 2025/26 trust tax return SA900 to the 2026/27 tax year.

The crucial entries therein will be on page 12 box 21.4 where you will insert the date of the deed as the trust termination date and in the additional information box 21.12 you will indicate the trust was terminated pursuant to that deed and enclose a copy for HMRC's information .

In your covering letter enclosing the PDF tax return you will explain you have calculated the tax payable and wish to settle the amount ASAP to facilitate early closure of HMRC's tax records for the trust. Once the trust tax is settled you can then go online to update the Trust register to show the trust as terminated, thereby completing all elements of HMRC trust compliance.

Naturally you cannot submit the SA900 without a UTR number obtained from HMRC as part of the trust registration process, which presumably you have not yet done, so a few intermediate steps to complete in this regard.

Despite your assurances that you a very familiar with completing tax returns, I remain unconvinced that your self professed 'competency' in dealing with personal tax returns extends to the complex and unfamiliar elements required for discretionary trust tax compliance especially in a settlor interested trust context.

I reiterate the suggestion that you get a professional involved.

itwasntme001

But you say that the trust has ended, but given any tax refund to the settlor will occur after next years SA submission for tax year 26/27, and this tax refund legally needs to be transferred to the trust fund, then surely the trust is or needs to remain open until the tax refund is received by the trustees and distributed to beneficiaries?

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/82015568#Comment_82015568

Answer is no.

Monies from the refund go back to the beneficiaries who now have to disgorge the 45% tax that should have been deducted from their income before you distributed it.

Look, if you don't like the answers and as repeatedly stressed, get yourself some paid for advice.

You have had far more than your fair allocation of my free expertise and considered guidance, that now ends.

DRS1

I have found this thread fascinating and would like to thank @poseidon1 for his posts.

I would also like to apologise to the OP. I read the settlor exclusion clause in the Aviva trust deed and it never occurred to me that it would be a settlor interested trust for income tax purposes. I should keep my mouth shut in future.