discretionary trust payment received

[mutantpoodle]

Hi, I am hoping for help from some who have experience on this matter.

I have received a payment as a beneficiary of a discretionary trust,
I have the accompanying R185 showing that the trust has given me a payment
and what the tax credit at trust tax rate is.

Annoyingly I am aware that I cannot submit my annual tax return online in view the trust payment
As I must complete a tax form 107,,,,,correct??

I have downloaded the 107 but am not understanding how to complete it
As far as I can see, I literally only have one box to complete...namely Box 1
being the ‘net amount after tax taken off!

So how do the HMRC know how much tax to refund to me
the trust paid tax at 45%
I am only a 20% payer
I realise that HMRC will have all my usual SA100 information
but…..

how and where do I show/tell them that I want the difference refunded to me

many years ago when the kids were small, reclaiming tax was easy...simply complete what was the old R140
send off
job done

but I am stuck on this……….
.I realise I have plenty of time as payment is in 22/23 tax year...but as the trust is to be wound up I would like to have everything correctly done before it disappears

[pochisoldi]

Hi, I am hoping for help from some who have experience on this matter.

I have received a payment as a beneficiary of a discretionary trust,
I have the accompanying R185 showing that the trust has given me a payment
and what the tax credit at trust tax rate is.

Annoyingly I am aware that I cannot submit my annual tax return online in view the trust payment
As I must complete a tax form 107,,,,,correct??

I have downloaded the 107 but am not understanding how to complete it
As far as I can see, I literally only have one box to complete...namely Box 1
being the ‘net amount after tax taken off!

So how do the HMRC know how much tax to refund to me
the trust paid tax at 45%
I am only a 20% payer
I realise that HMRC will have all my usual SA100 information
but…..

how and where do I show/tell them that I want the difference refunded to me

many years ago when the kids were small, reclaiming tax was easy...simply complete what was the old R140
send off
job done

but I am stuck on this……….
.I realise I have plenty of time as payment is in 22/23 tax year...but as the trust is to be wound up I would like to have everything correctly done before it disappears

I looked at the SA107 form and the guidance notes, and was similarly confused, however if you think about it, the net amount has suffered tax at 45% on the whole lot, so a box for "tax deducted" is not required, as the amount of deducted tax can always be derived from the net amount.

Gross = net amount/0.55
Tax paid = gross * 0.45
therefore Tax paid = net amount * (0.45/0.55)

Adding a box for the tax just increases the chances of a mistake being made.

[mutantpoodle]

FAO Pochisoldi

thanks your reply

so we credit HMRC as being able go work out the tax that has been paid
and to link it to my personal SA100
and add the difference in tax rates to my deemed income

or do they add the gross to my income and then tax it at my due rate

imo they would be hard pressed to make it more complicated

a simple 'benefit received £**
tax paid on said benefit £***
gross benefit.... total of above

add to SA100 income and tax accordingly


a child could do it............and I might uderstand it

[firefly]

I received a discretionary trust payment in the 2021/2022 tax year - so this is useful information.

I could not work out how to enter the information on my online tax return.

I will look at the forms below.

Regards,

[Gan020]

Hi, I am hoping for help from some who have experience on this matter.


Annoyingly I am aware that I cannot submit my annual tax return online in view the trust payment

I will reply more fully with detail when I have time but you may not be correct about this.

Certainly my kids submit their tax returns on-line who get payments from a discretionary trust.

[firefly]

Thank You.

I look forward to your reply!

[mutantpoodle]

Hi, I am hoping for help from some who have experience on this matter.


Annoyingly I am aware that I cannot submit my annual tax return online in view the trust payment

I will reply more fully with detail when I have time but you may not be correct about this.

Certainly my kids submit their tax returns on-line who get payments from a discretionary trust.

I would love to find that you are right about that
but the SA100 clearly says not OK to submit if payments from trusts, use commercial software

thats why they then complicate things by needing the SA107

hope that you have some time soon!!

[Gan020]

Hi, I am hoping for help from some who have experience on this matter.

I have received a payment as a beneficiary of a discretionary trust,
I have the accompanying R185 showing that the trust has given me a payment
and what the tax credit at trust tax rate is.

Annoyingly I am aware that I cannot submit my annual tax return online in view the trust payment
As I must complete a tax form 107,,,,,correct??

I have downloaded the 107 but am not understanding how to complete it
As far as I can see, I literally only have one box to complete...namely Box 1
being the ‘net amount after tax taken off!

So how do the HMRC know how much tax to refund to me
the trust paid tax at 45%
I am only a 20% payer
I realise that HMRC will have all my usual SA100 information
but…..

how and where do I show/tell them that I want the difference refunded to me

many years ago when the kids were small, reclaiming tax was easy...simply complete what was the old R140
send off
job done

Hi,
So, I checked and I have never submitted an electronic tax return with Trust income. I actually don't know whether I can or not as I have other sections to complete which demand a paper copy.

However, there may be a workaround which is what I do for my kids who only receive a salary, some bank interest and the income from the Trust. On the basis you are due a refund (which you say you are based on the distribution being at a higher tax rate than your marginal tax rate of 20%) you can do claim for repayment on-line here which is the on-line R40 which you are broadly familiar with from the past.
https://www.gov.uk/government/publicati ... tments-r40
You will need to enter all your income in the usual way. In the Trusts section you will need to enter two numbers.
The first is the "net amount taxed at trust rate". This is the actual amount you received from the Trust i.e. the cheque or BACS value.
The second is the "tax paid or tax credit on net amount taxed at trust rate". This is the value in the first box multiplied by 45/55. i.e. if you put £1000 in the first box then you put £818.18 in this box.

If this doesn't help and you have to do a paper tax return you put the actual amount received i.e. the cheque or BACS amount in box 1 on the Trusts section of the paper return. That's it, you do not have to enter the "tax paid or tax credit" amount as HMRC will work this out automatically.

PS. If you have to do a paper return you may have to wait forever for your money. I submitted mine in April and they tell me they will process it in January. I raised a complaint about this in August which they acknowledged but have not dealt with, I then raised a complaint about the complaint in November which again they have acknowledged but not dealt with. Curiously I also did the same with my wife's return but they dealt with the first complaint in about 8 weeks. I note the value of her claim was small!

[genou]

...but the SA100 clearly says not OK to submit if payments from trusts, use commercial software

...

If you have Excel, this is available https://sa2000.co.uk/alltaxes.htm , and is pretty cheap. I've used it quite happily in the past.

[scrumpyjack]

...but the SA100 clearly says not OK to submit if payments from trusts, use commercial software

...

If you have Excel, this is available https://sa2000.co.uk/alltaxes.htm , and is pretty cheap. I've used it quite happily in the past.

It's free though you do pay if submitting over the internet rather than on paper. So you can fill it in to see if the tax comp is as you think it should be (eg 45% tax already paid)