Informal concession for low income trusts to be formalised

HMRC is consulting on formalising and extending a concession introduced in 2016 that removes trusts and estates from income tax where the only source of income is savings interest and the tax liability is below £100.

Under the proposals low income trusts and estates with income from any source up to a ‘de minimis’ amount (to be decided after the consultation) will not be subject to income tax on that income.

For trusts and estates with income more than the de minimis amount income tax will be due on the full amount of income rather than applying to the income only above the de minimis amount. According to HMRC this is in the interests of simplification for taxpayers and itself as the rules required to take the alternative approach would be complicated and require additional administration for all involved.

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