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Self Assessment for the Elderly: How Trusts will be affected

Perhaps the most common form of Will Trust, after provision for the very young, is the provision of an income for an elderly dependent, often the widow. The provision may of course be the simple grant of a life interest or, where substantial sums are involved and other considerations apply, the trustees may have certain discretions. It is estimated that a very substantial proportion of all Will Trusts are administered without professional help, and many of these may have existed for years without the need for formal annual accounts. The income from the trust investments has been mandated to the tenant for life and as often as not the investments have lain undisturbed (save for the occasional take-over or rights issue) from year to year.

1 November 1996

Awareness of the Problem

Whether Self-Assessment ("SA") will change all that is the subject of this series of articles. Certainly those elderly people who watch television or who read newspapers can hardly fail to have become aware of SA through the extensive advertising by the Inland Revenue. Elderly beneficiaries of trusts will, increasingly over the next few months, seek reassurance from their trustees about the tax position. Lay trustees, who in the nature of things may very well be as old as the beneficiaries (for example close friends of the testator), will also need urgent advice on SA for trustees.

Hundreds of thousands of elderly taxpayers are entitled to seek repayment of tax deducted at source. Whilst they will by now probably have made the necessary arrangements with Building Societies for interest to be paid gross, they will still be seeking repayment of tax deducted from Trust Income, probably at the end of each year, and they will now wish to...

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