Investigating the assets on page7 - Trust Income due to the deceased (box 75)
Box 74 of the IHT400 includes any income from a trust (IHTM16030) where the trustees have received the income but not paid it to the deceased before they died. For example, a dividend may have been due to be paid but no payable order had been issued at the date of death.
You will need to check that the trust fund that produces the income is included on form IHT418.
Where the settled property is excluded under IHTA84/SCH6/PARA2 any accrued income that is due to the estate will be liable to inheritance tax. The exclusion only covers apportioned income. If the settled property that qualifies for the exclusion includes substantial income producing assets you may consider checking with the taxpayers if there was any income
- that was due for payment at the date of death but which had not been paid, or
- had been paid before death but had not been received by the deceased and, if so, how much?
Before raising any enquiries you should consider whether the enquiry is likely to be worthwhile in terms of tax.
Box 73 of the IHT400 should also include any income from a trust, that the deceased is entitled to at the date of death under the terms of the Apportionment Act 1870. Broadly these are periodic payments such as rents, annuities and dividends that are income and where
- the next payment was due to be paid after the deceased’s death, but
- the last payment was made before the date of death.
Apportioned income will be due for the period between the last date of payment and the date of death.
The calculation of apportioned income is complicated and further guidance can be found at (IHTM16000) . But, in most cases, you will be only need to make sure that the trust fund on which the income arises is included on form IHT418.
If the apportioned income is an asset of the free estate you should also check that a similar sum has been deducted against the value of any settled property on form IHT418.
If there is a significant difference between the deduction and the sum included as an asset in the estate, you should ask the taxpayers and trustees, or the agents acting for them, to resolve the differences in these figures.
The apportioned income on settlements that are excluded from the charge to IHT under IHTA84/SCH6/PARA2) is not liable to Inheritance Tax.