.png)
.png)
Revenue & Customs Brief 26/11 explains the impact for taxes and tax credits of payouts under the Equitable Life payment scheme.
Under the Equitable Life (Payments) Act 2010 such payments are to be free of tax and to be disregarded for tax credit purposes.
Payments from trusts to beneficiaries of trust will retain their tax free status where the beneficiary is entitled as of right to receive the payment under the terms of the trust.
Payments made by trustees in exercise of a power or discretion given to them by the trust deed are not authorised payments as they do not flow directly from the receipt of the payment. They will therefore be subject to the usual tax treatment for such payments.
Individuals and companies who receive payments will not have to declare them on self assessment tax returns or on claims for repayment of tax on form R40.
Likewise, such payments will be disregarded for the purposes of capital gains tax and corporation tax on chargeable gains and do not have to be reported to HMRC.
Where a payment is made to the estate of someone who has already died, the right to receive the payment is disregarded in establishing the value of the estate for inheritance tax purposes.
There is no need to tell HMRC Trusts and Estates that the executors have received such a payment.
A payment that is made to someone while they are alive, however, forms part of their estate and will be subject to inheritance tax in the normal way.
