Low income trusts and estates – will next year’s changes affect you?

Important changes which will exempt many low income trusts and estates from income tax are to be brought in from April next year (2024).

Designed to reduce paperwork and cut down on administration, the government’s move will be welcomed by both the personal representatives and beneficiaries of lower value estates.

What are the key changes for low income trusts and estates?

• Trusts and estates in administration (after someone has died and their Will is being executed) with a net income of £500 or less will be considered to have no income for tax purposes.
• This will probably mean that there is no need for a tax return to be completed.
• Beneficiaries of lower value estates will not be taxed on income that falls within the £500 limit.
• The new rate replaces the default basic rate and dividend ordinary rate of tax that applies to the first £1,000 slice of discretionary trust income.

With more detail and guidance expected over the coming months, please contact our specialist Wills, Probate and Mental Capacity team for more information or to see how this change might affect you.

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Our Wills and Probate Team has extensive experience in tax planning and wealth preservation and can help you make or update a correctly drawn Will, an inexpensive way of avoiding difficulties for your loved ones when you die. It also ensures you don’t miss out on fast changing tax laws, including IHT, which could save your family money in death duties.