Discretionary trust taxation - onshore bond
barrett500
Member
Hi all,
If a discretionary trust's only asset is an onshore bond and there's no distribution of capital are the trustees still required to complete a tax return? If not then any ideas how the trustees notify HMRC a tax return is not required? Can this be done via the Gov Gateway?
Thanks.
Daniel Barrett BSc DipPFS
Comments
Are they being asked by HMRC to complete one?
They have been to date but this is because the trust holds NS&I bonds, however, the recommendation is to encash the NS&I bonds and reinvest into the bond to avoid the need for ongoing tax returns
Daniel Barrett BSc DipPFS
Oh yeah, that's cool then. No need to report and I'm not sure if Trusts are notified to send another return (like personal Self-Assessment), but if they do:
https://www.gov.uk/check-if-you-need-tax-return
This wizard tells you what to do.
Chances are you are in the "self assessment" regime for trust returns so HMRC will expect a return for the current year.
You may still need to complete returns in the future; depends to some extent on how "clean" the trust is once you have altered the investments; tax pool relating to undistributed income may still need to be reported each year.
Once the investments have been tidied up, submit the 2018/19 return as usual in due course and at that time inform HMRC that no taxable income will arise for 2019/20 and beyond so no need for tax returns and they may remove trust from their list of returns needed.
Thanks gents. Yes we're hoping to have the trust 'cleaned up' by the end of this tax year so this year is the last tax return needed, unless something changes in the future.
Daniel Barrett BSc DipPFS