Completing a SA900

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Completing a Trust Return SA 900

 A Will Trust was established a number of years ago. The widow has been a life-tenant until she died in June 2015. Two daughters became absolute beneficiaries to all the assets upon mother’s death.

 The trust assets comprise a residential property and a number of shares in UK listed companies. The trustee has filed a SA900 return each year and the widow has included the trust income on her SA return each year.

 I am not sure what needs to be included on the 2015/16 trust return. Obviously income up June 2015, but what about the income after that date – do we need to deal with as trust income until all the assets are disposed of /transferred to the daughters?

 Capital Gains. There is a deemed disposal – no gain, no loss - of all the assets on the death of the life-tenant Do we need to complete a CGT supplement for this ?



Replies (4)

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By gbuckell
25th Aug 2016 09:33

After date of death the income belongs to the beneficiaries and should be reported on their returns. It is not included on the trust return as it is no longer income of the trust. Until title of assets are transferred, the trustees are simply bare trustees.
Less sure on the CGT point. I cannot see the need for a CGT supplement. Perhaps you could include a white space note for avoidance of doubt.

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By Igor Nankun
25th Aug 2016 11:19

Does TCGA 1992, s. 72(1)(b) not cover the CGT point?

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By gbuckell
25th Aug 2016 11:23

Agreed there is no CGT charge but is there a need to report the deemed disposal?

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By Igor Nankun
25th Aug 2016 11:39

I think not:

TCGA 1992, s. 72(10(b) "No chargeable gain shall accrue".

S. 3A(1) then says that ticking the box that the disposals do not exceed the threshold is sufficient, if:
- the chargeable gains (none) do not exceed the exempt amount, and
- the consideration for chargeable disposals does not exceed four times that amount.

S. 3A(3) then defines a chargeable disposal as any disposal other than one on which any gain accruing is not a chargeable gain.

It follows from that since the gain is not a chargeable gain by virtue of s. 72(1)(b) the deemed disposal of the asset is not a chargeable disposal, as defined in s. 3A(3) and the deemed sale proceeds are not then relevant..

I would simply advise HMRC that the trust ceased on XX/XX/201X when the life tenant died and the remaindermen became absolutely entitled to the trust property. They will know that there cannot be any chargeable gains in that situation.

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