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Posted Tue, 11 Apr 2023 10:37:24 GMT by SB_Trust
My nephew is the sole beneficiary of a trust set up following the death of his mother in 2021. This is a Bereaved Young Person's Trust (18-25), so he will receive the trust on his 25th birthday. There was no inheritance tax due on the estate. The Trustees made an advance last year to help him buy a house. The Trust will be paying the exit charge due on the advance (as he is 24 years old). My nephew should have no liability to income tax on this. For his self-assessment, he was going to tick box 6 (page 2) to say he received income from a trust. Is this correct if it is not taxable? Form SA107 states it should not be completed for a bare trust but the income should be recorded in the appropriate SA100 box. But we cannot really find an appropriate box (it is not taxable income). Which boxes should he complete to declare this income (if at all) and ensure he is not taxed on this?
Posted Tue, 18 Apr 2023 13:26:57 GMT by HMRC Admin 19

The income will need to be declared on the SA107 but as tax will have already been paid by the trust, then no additional tax will be due. 

Thank you.
Posted Tue, 18 Apr 2023 14:04:07 GMT by SB_Trust
Many thanks for the reply. I can't really see on the SA107 where this would be declared. There is no income tax due to be paid by the trust. My nephew's mum left her estate to him in her will (18-25 Trust). Due to the value of the estate there was no IHT due. However, as he is over the age of 18 there is/will be an IHT charge where there is an advancement and/or absolute interest is taken at age 25. There is no income tax payable by the Trust or my nephew. The payment received by my nephew was an advancement of assets for his benefit. The Trust does not pay income tax (just the exit charge), so I'm still not clear how this relates to the SA107. It is not a "discretionary income payment" or a "non-discretionary payment". Do we put in the discretionary box anyway as a net figure and then put notes in the Additional Box? Thanks for your patience!
Posted Wed, 26 Apr 2023 07:48:54 GMT by HMRC Admin 25
Hi SB_Trust,

This does not need to be shown on SA107.  
Inheritance tax is due when assets are transferred out of a trust (known as exit charges).  
Have a look here:
Trusts and Inheritance Tax
IHT100 is completed when inheritance tax is due.
Inheritance Tax account (IHT100)

Thank you. 

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