D02: Flat Managers Trust and Their Taxation

Synopsis

  • Service charge monies held by landlords and their managing agents must be held in “trust” by statute.
  • The trustees are the landlord or the person named in the lease to whom service charges are payable.
  • For tax purposes these trusts are classed as discretionary trusts.
  • Tax is payable on interest earned in these trusts at the rate applicable to trusts.
  • Managing agents can deduct agreed expenses from the tax payable.

Covering Topics

  • Overview
  • Creation Of Flat Management Trusts
  • Who Are The Trustees?
  • What Happens To Trust Funds On Resales?
  • Taxation Of Flat Management Trusts
  • Bank Interest Received
  • How To Pay The Tax In Practice
  • Failure To Pay Tax At The Correct Rate
  • Tax Forms R185 For Individual Leaseholders
  • Deduction Of Expenses From Tax Paid On Interest
  • Further Information

Resource

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