Trusts and Estates: What’s New December 2021

HMRC's latest Trusts and Estates newsletter contains some useful information. Here is our enhanced version.

Capital Gains Tax Payment for Property Disposal Service

Two changes to the Capital Gains Tax (CGT) Payment of Property Disposals (PPD) service rules were announced at Autumn Budget 2021.

Time limits

Taxpayers, including trustees and personal representatives and their agents:

• Have 60 days, instead of 30 days, from the date of completion to report and pay tax on a disposal of UK residential land and property that results in CGT having to be paid if the completion date for the disposal was on or after 27 October 2021.
• Still have 30 days from the completion date to report and pay tax on a disposal of UK residential property if the completion date was before 27 October 2021.
• Where the taxpayer is non-UK resident the 60-day deadline applies to all UK property disposals and not just residential property. See Non-resident CGT: UK property.

See CGT: Payment of tax

Mixed-use property

For UK residents only:

• Where there is a gain on a mixed-use property, only the portion of the gain attributable to the residential part of the property has to be reported and paid within 60 days using PPD.
• A mixed-use property is one that has residential and non-residential elements.

See CGT: Reporting, how to report CGT?

Raising standards in the tax advice market

On Tax Administration and Maintenance Day, the government published a summary of responses and next steps following the consultation earlier this year on whether to introduce a requirement for mandatory Professional Indemnity Insurance (PII) for tax advisers.

• They have decided not to introduce a requirement for mandatory PII for tax advisers at this time.
• There will be a consultation in 2022 on options to improve the wider regulatory framework around standards in tax advice, this will also include a proposed definition of tax advice.

The government has also published externally commissioned research on Understanding the characteristics of unaffiliated tax agents.

See Tax Agents: Raising standards in the tax market

Inheritance Tax (IHT) reporting requirements

• Changes have been made to the IHT reporting requirements for non-taxpaying estates.
• From 1 January 2022 most non-taxpaying estates will no longer have to complete IHT forms for deaths where probate or confirmation is required. 

For deaths after 31 December 2021, personal representatives must include the following on the probate or confirmation application:

• A declaration that the estate is an excepted estate.
• If they are claiming transfer of unused nil-rate band.
• Three estate values for IHT purposes.
  • They will be able to obtain these values by using the Inheritance Tax Checker tool. 

See IHT reporting requirements to be eased

Inheritance Tax and Probate application timelines

• HMRC and HMCTS have introduced a new joint process for sharing digital IHT421s between departments.
• For probate applications in England and Wales, HMRC aim to release the IHT421 to HMCTS within 15 days of receiving the IHT400 or payment of any Inheritance Tax due, whichever is later.
• HMRC recommend allowing 20 days from sending your IHT400 before applying for your grant of probate from HM Courts and Tribunals Service (HMCTS). If you submit your application too early HMCTS may not be able to match your application with the IHT421 which could lead to delays.

Posting original documents to HMRC

Do not include any original documents such as wills or settlement deeds with your Inheritance Tax account. HMRC do not require original documents.

Payment of Inheritance Tax

• HMRC recommend that you pay electronically wherever possible.
• Cheques should not be enclosed when submitting your IHT400: this may cause a delay in the processing of the Inheritance Tax account.
• Cheques should be made payable to ‘HM Revenue and Customs only’ with the name of the deceased and IHT payment reference written on the back and sent separately to:

HM Revenue and Customs
Inheritance Tax Team
BX9 1HT

External link

HMRC Trusts and Estate Newsletter: December 2021