In the 2015 budget the government announced that from 6th April 2016 a personal savings allowance would be introduced. This means that your bank will no longer deduct tax on interest received at source and any beneficiaries will be responsible for tax reporting to HMRC.
The Service Charge team at Haines Watts have been looking at the implications this may have for our service charge clients.
Previously, trust tax returns have not been required where income has been received net of tax. To understand the impact of how this change may affect the completion of trust returns, we contacted HMRC who confirmed that they will be putting in place interim arrangements for such cases. This means that for the current tax year (2016/17), HMRC will not require notification from trustees, where the only source of income is savings interest and the tax liability is below £100. However, a trust tax return will now be required for all developments with trust accounts earning gross interest over £500 a year. If this will be applicable to your managed schemes, HMRC will need to be notified by 5th October 2016.
We have yet to hear what HMRC’s plan is for the following tax year but we’ll be sure to keep you updated on any changes.
If you think that you may be affected by the new interim rules and that your trust could now have a tax liability in excess of £100, give one of the dedicated Service Charge teams a call at either Haines Watts Luton on 01525 717424 or Haines Watts Southampton on 023 8027 6323 or you can email us at email@example.com.
For advice, information or simply a quick chat about your service charge needs, please get in touch using our contact form