Tax on payout from life policies written in trust
Posted: October 2nd, 2021, 3:49 pm
In 1978 my parents settled life policies in a Vanbrugh flexible trust scheme, UK. My sister and I are beneficiaries. The payout was to be on 2nd death, which was almost three years ago. (The estate's had probate granted and pretty much everything distributed.)
I only notified the life company of the death this summer, and they paid out very recently. The Chargeable Event Certificates state that the gain should be disclosed on our next self assessment tax returns under 'Life insurance gains'. However I'm of the opinion that I need to register this trust with HMRC, obtain a UTR and pay the trustee rate of tax on the policy gains, which would be an effective 25% (45% trustee rate less 20% tax deemed already paid).
I mentioned this to the accountant that handles my small ltd co accounts. He's suggested that there's no need to register the trust at all, given that it never generated any income and has now paid out.
Is any reader able to give me which approach is correct?
I only notified the life company of the death this summer, and they paid out very recently. The Chargeable Event Certificates state that the gain should be disclosed on our next self assessment tax returns under 'Life insurance gains'. However I'm of the opinion that I need to register this trust with HMRC, obtain a UTR and pay the trustee rate of tax on the policy gains, which would be an effective 25% (45% trustee rate less 20% tax deemed already paid).
I mentioned this to the accountant that handles my small ltd co accounts. He's suggested that there's no need to register the trust at all, given that it never generated any income and has now paid out.
Is any reader able to give me which approach is correct?