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Changes to the tax regime for unauthorised unit trusts are the subject of new guidance released by HMRC.
A trust with at least one exempt unit holder and one non-exempt unit holder for the period from 24 May 2012 to 5 April 2014 will be a mixed unauthorised unit trust, and will complete its tax return (SA900) in the same way as for earlier tax years.
Changes to the tax regime for unauthorised unit trusts are the subject of new guidance released by HMRC.
A trust with at least one exempt unit holder and one non-exempt unit holder for the period from 24 May 2012 to 5 April 2014 will be a mixed unauthorised unit trust, and will complete its tax return (SA900) in the same way as for earlier tax years.
The 2013/14 tax year was the final period for which a non-exempt unauthorised unit trust had to file a return (SA900) for income tax purposes – but it is within the charge to corporation tax from 6 April 2014, and should be notified to the Revenue within 12 months of the final day of its first accounting period ending on or after 6 April 2014.
The unit trust may also be liable to pay tax by quarterly instalments, the first of which will be due six months and 13 days after the start of the accounting period.
An exempt unauthorised unit trust is one whose trustees are UK resident and whose investors are all exempt from capital gains tax or corporation tax on chargeable gains (other than because of residence), and must be approved under the regulations.
Applications for exempt status may be made to HMRC on form CISC11 no later than the final day of the first period of account for which approval is sought.
Income for the tax year will normally be for a 12-month accounting period ending in the year of assessment. All income shown in the accounts for the period is treated as arising in the tax year, and there is no longer a requirement for trustees to deduct tax from deemed payments to unit holders.
If unit holders of an exempt unauthorised unit trust are treated as receiving income, the trustees are treated as making a deemed payment of the same amount on the final day of the period of account.
The trustees are entitled to relief for a tax year equal to the amount of the deemed payments treated as made in that year.
