Where to out this on a trust tax return?

Can't see where it goes

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We have a new trust client.  It is a will trust and in the first year, they received an income distribution from the solicitors dealing with probate of the said settlors estate.  I have an R185 which shows that tax has been paid at 7.5% on the dividends.

There is no "trusts and estates" section on a trust tax return.

I can't enter a tax credit in the dividends section of the return

So how do we claim credit for the tax already paid?

Yours confusedly........

Replies (18)

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By Catherine Newman
12th Oct 2022 15:37

I am confused. Has the client received a sum from a Trust in which case you create Trust and Estate pages within the personal SA return (SA107). You put the net payment in either the Discretionary Box or the Non-Discretionary box and the calculation grosses it up.

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Replying to Catherine Newman:
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By snickersinatwix
12th Oct 2022 16:41

the trust has received a payment from the estate. there are no trust and estate pages in a trust tax return.

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By richard thomas
12th Oct 2022 15:48

Box 9.10 on the SA900, say the Guidance Notes which refer to this topic, but that is for real dividends that have not been taxed before receipt, so I would go for 9.17 to 9.19.

Seems to work in the tax calculation notes, but I've only had a cursory look.

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Replying to richard thomas:
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By snickersinatwix
12th Oct 2022 16:40

It won't tax this income at the dividend rate then though will it?

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By Tax Dragon
12th Oct 2022 15:57

The notes say to put the dividend in 9.10 as usual and the tax in box 17.4.

Edit: Richard beat me to it - but I wonder whether this applies only if s483 is in point. That section essentially deems it to be income if the trust is discretionary. But why is it necessary to deem it to be something if it already is that thing?

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Replying to Tax Dragon:
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By richard thomas
12th Oct 2022 16:36

Section 680A ITTOIA says all you need to say, I'd have thought, and applies to any type of trust.

I agree that it's not at all clear why s 483(2) is needed.

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Replying to richard thomas:
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By Tax Dragon
12th Oct 2022 16:45

Thank you.

I guess it's age: s680A isn't even old enough to vote yet (in any part of the UK); s483 is the Parent of the House - and perhaps wasn't amended out of respect.

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Replying to Tax Dragon:
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By richard thomas
12th Oct 2022 17:45

In origin they are roughly of the same age (1996 and 1997).

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Replying to richard thomas:
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By Tax Dragon
12th Oct 2022 21:04

I knew my tax history books were rubbish. Which hurts, because an understanding of the history of tax helps with understanding it now (so I appreciate why your library seems to date from 1799... but getting my partners to agree we need the same... never gonna happen).

Way I read it anyway was s680A came in in 2007 while s493 pre-dated ICTA 1988. Even going back that far is quite difficult with the resources I have, probably why I got it wrong :-(

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Replying to Tax Dragon:
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By richard thomas
13th Oct 2022 14:43

S 483 ITA derives partly from s 686 ICTA 88 which was a consolidation of a much earlier provision. But the only thing that s 483 does now is to find the appropriate rate of tax for income which might be taxed at different rates in the hands of the executors - and that derives from s 32 F(No. 2)A 1997 amended s 686 to provide for a split in the rates of income tax.

S 680A ITTOIA was inserted into ITTOIA by Sch 1 ITA (consequential amendments). The Explanatory Notes say that it was based on s 698A ICTA, which was inserted in 1996 as a result of the 20% lower rate of tax on certain savings income. That was the start of the slippery slope that led to the monstrosity that is now Part 2 ITA 2007.

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Replying to richard thomas:
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By Tax Dragon
13th Oct 2022 15:02

Thank you.

(I had another look this morning and still couldn't (re)trace this history.)

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Replying to Tax Dragon:
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By snickersinatwix
12th Oct 2022 16:39

thanks - I was thinking of doing that, but no doubt HMRC will "correct" the submission as the tax is not sitting in the client's on line account.....

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Replying to snickersinatwix:
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By Tax Dragon
13th Oct 2022 09:27

snickersinatwix wrote:

thanks - I was thinking of doing that, but no doubt HMRC will "correct" the submission as the tax is not sitting in the client's on line account.....

So maybe include a white space explanation - I don't see an issue with including the UTR of the Estate in the note.

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Replying to Tax Dragon:
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By snickersinatwix
13th Oct 2022 09:34

I agree that would be ok, but I am just trying to avoid the inevitable "amendment" by HMRC followed by a round of correspondence and phone calls. Sadly i think this is inevitable.
It would be lovely to be able to complete the return and know that HMRC won't fiddle with it. we all know they won't read whatever I put in the white space.

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Replying to snickersinatwix:
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By richard thomas
13th Oct 2022 14:50

If what you are talking about is using Tax Dragon's suggestion of 9.10 and 17.4, I would say that my suggestion of 9.17 to 9.19 involves less subterfuge. 17.4 is about farmer's averaging!

The only slight inaccuracy in using 9.18 for the 7.5% tax is that strictly it is not "tax taken off" to use HMRC's babytalk term for "deducted". But HMRC accept that tax paid by executors is "tax taken off" in the hands of the beneficiaries and on the R185 (Estates) so they are never going to query it.

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Replying to richard thomas:
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By Tax Dragon
13th Oct 2022 15:01

richard thomas wrote:

If what you are talking about is using Tax Dragon's suggestion....

Not mine, HMRC's. SA950, p13, final para.

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Replying to Tax Dragon:
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By snickersinatwix
13th Oct 2022 15:14

superstar! thanks

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By Ajtms
17th Oct 2022 12:58

I have had dozens of these situations. Put the gross dividend in box 9.10 and the dividend's tax deduction in box 9.8 (yes combining it with tax deductions on interest) My Taxcalc software has no problem with it and neither does HMRC when it is electronically submitted.

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