B P Collins' private client lawyers have identified a problem facing lay executors following the HMRC’s requirement to formally register trusts and complex estates online.

As they don't have access to expert advice, a lay executor may be unsure of their obligations once their inheritance becomes a complex estate and if the deadline is missed, they could end up paying the HMRC up to 5% of the tax liability or a £300 penalty.

When must they register?

  1. If someone inherits an estate e.g. a property worth £472,000 (the average house price in London, ONS) in one particular tax year, this would not require registration because it is below the HMRC’s £500k threshold. However, this inheritance may become a complex estate if the executor chooses to sell the property say in 4 years’ time, at a price that matches the current growth rate of 1.54% as the asset would then exceed the HMRC’s £500,000 threshold to register.
  2. If an executor has a new complex estate which incurs tax liabilities in excess of £10,000 during the period of administration, they will need to register online with HMRC.

What are the deadlines?

Any existing trusts or estates needed to be registered by 5 October 2017 and any amendments need to be made by 5 October 2018.  The ongoing deadline for any new trusts or complex estates is 31 January of the year following the death so the next deadline is 31 January 2019.

For further advice on complex estates and how to register or any other estate planning issues, please contact Sharon Heselton. Call 01753 279030 or email privateclient@bpcollins.co.uk.

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Sharon Heselton
Principal Lawyer (Non Solicitor)

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