Detailed Probate Nominal Ledger Structure

Nominal Ledger Structure

Income/Profit and Loss accounts

0000...0999 Income Account

1000...1999 Capital Movements and Expenses

2100...2999 Property Income and Expenses

3100...3999 Property Gains and Expenses

Assets As At Date of Death

4000...4999 Assets and Liabilities as at Date of Death

Balance Sheet accounts

5000...5999 Assets of Executors

6000...6999 Liabilities of Executors

8000...8Z99 Beneficiaries’ Accounts

9000...9999 Affidavit Accounts

ZZ00...ZZZZ Special codes

With some exceptions, the account pages use the account ranges as follows:

Estate Capital Account 4000...4999

Estate Capital Account Continued 1000...1999

Income Account 0000...0999

Property Income Account 2100...2999

Distribution Account 8000...8Z99

Balance Sheet 5000...5999 and 6000...6999

Note: The Balance Sheet must show the Balance of Residue. It must pick up the total of 8000...8Z99; however this is just a single figure. The detail that appears on the Balance Sheet depends on accounts 5000...5999 and 6000...6Z99.

0000...0999 Income Account

The account ranges are further analysed below:

The accounts with titles in capitals are headings and not used for postings. The long description is asterisks:

Account 0000 which is the first account in the chart also says ‘(V2.8)’ in the Long Description, this is the version number of the chart of accounts.

• Accounts 0000...001Z are usually gross of tax. It is possible to post investment income net of tax. If Trust Accounts is linked to CCH Personal Tax this is not advisable as the tax credits will not be reflected on the tax return.
• Some users like the Income Account to begin with Investment Income Received. This figure is gross for those securities that pay gross of tax (e.g. some gilts) and net for those that pay net. The best way to achieve this is to set up an account 0002, which is used for tax on investment accounts. 0001 is gross of tax and 0002 is the tax deducted at source. In the Income and Expenditure Account, accounts 0001 to 001Z are added together and shown as a single figure. This figure is the Investment Income Received. The link to CCH Personal Tax still works properly as the tax credits are being entered.

Due to the way in which the link to CCH Personal Tax works it is not necessary to use separate income accounts for different types of investment. Unless different types of investment income are to be shown separately on the Income Account, CCH Software recommends that all investment income from securities be posted to account 0001. This is discussed further below.

• Accounts 0020...005Z can be posted either net or gross of tax. The CCH Software Income Account simply lists these accounts together with their titles. Some users prefer to post these amounts net of tax as this saves them from posting the tax deducted. Other users argue that if the investment income is shown gross then it is better to show the interest accounts gross as well. Currently bank interest postings cannot be transferred directly to CCH Personal Tax. When this becomes activated, it should work for postings either net or gross of tax provided that a consistent coding scheme has been followed, e.g. always using account 0022 for gross bank interest, or always using it for net bank interest. The CCH Software chart assumes that accounts 0022 and 0040...0049 are gross and the other accounts are net.
• Accounts 0061 and 0062 are both used for Net Property Income. Similarly accounts 0200...0299 can be used for Property Income and Expenses. The accounts to use depend on the presentation required. This is discussed further below.
• Account 0999 is used to divide the net income between the beneficiaries. The effect of this posting should be to leave a zero balance across the whole range 0000...0999. Account 0999 is not otherwise picked up in the accounts pages. Account 0999 is also used if net income is taken to the Estate Capital Account. The effect is to leave a zero balance across the whole range 0000...0999.

1000...1999 Capital Movements andExpenses

• The accounts for capital movements and expenses work in a similar way to the income and expense accounts. However, whereas there is a separate Income Account as part of the CCH Software accounts, the capital movements and expenses are just listed as part of the Estate Capital Account Continued.
• As with investment income it is not necessary to use different Profit on Disposal accounts for different types of investment as the investment schedule can sort the securities by their type. So, account 1051 is usually used for gains on all types of securities.
• Accounts 1050...1059 are shown as a single figure on the Estate Capital Account Continued with the description ‘Profit (or loss) on Investments’. It is cross referenced to the Investment Schedule. Whereas accounts 1060...1069 are itemised on the face of the Estate Capital Account Continued and are not cross referenced. In this case the descriptions come from the nominal account descriptions.
• Accounts 1061 and 1062 are both used for Property Gains. Similarly accounts 1200...1299 can be used for Property Expenses on sale. The accounts to use depend on the presentation required. This is discussed further below.
• Account 1901 is used if the net income of the estate is carried forward to the Estate Capital Account. It is not used if the net income is taken directly to the Distribution Account.
• Account 1999 is used to divide the net residuary estate between the beneficiaries. The effect of this posting should be to leave a zero balance across the whole range 1000...1999. As before account 1999 is not otherwise picked up in the accounts pages.

2000...2999 Property Income and Expenses

There are four ways of dealing with property income:

1. Set up each property in the investment ledger and use the Investment Schedule to produce a property schedule. Expenses appear as negative income on this schedule. This method is usually only appropriate for properties with no significant expenses such as unlisted securities, currency holdings or antiques. Users who are happy with this method set up every property in the investment ledger with both the income and expense account. However, for higher value properties such as land more detail is usually required.
2. If the income is rental income and the total is less than £15,000 annually then it is not necessary to list the expenses separately on the UK Tax Return. Some users who show the minimum detail required for completing the Tax Return take the property income directly to the Income Account using accounts:

Using these accounts is often combined with (1) above.  The income account on the property is set to 0063 and the expense account set to 0065. For any disallowable expenses the default expense account in Data Entry is overridden with 0066. Alternatively, all expenses can be entered as nominal ledger entries, e.g. as bank payments, then the investment schedule shows property income but not the negative amounts for expenses. (2) above is not common but is included if you wish to use it.

1. If there is only one property and it is desired to show details of the property income and expenses on the face of the Income Account, then use accounts 0200...0239:

The values on the above accounts are listed at the end of the Income Account as Property Income and Property Expenses.

1. If there is more than one property, and details of income and expenses are required for each, a separate Property Income Schedule is produced. In this case, accounts 2100...2139 are used for the first property, 2200...2239 for the second and so on. After the income and expenses have been entered, a journal is posted to carry the net property income from the Property Income Account to the Income Account. The accounts are used as follows:

3000...3999 Property Gains and Expenses

There are three ways of dealing with capital gains on properties. These are like the ways for dealing with property income:

1. Set up each property in the investment ledger and use the Investment Schedule to show the gains. This approach is suitable when there are no capital expenses that need to be shown set off against a specific property. The main accounts are:

1. Where there are capital expenses that need to be analyzed in the accounts these are posted as Bank Payments and are not shown on the Investment Schedule. This is because movement codes for expenses such as EXP assume that the expense is an expense against income, not against capital. The investment schedule is used to show the gross gain and then nominal accounts are used to show further expenses that need to be analysed. If there is just one property, then this can be shown on the face of the Estate Capital Account Continued. The accounts to use are:

1. Where there are multiple properties, whose expenses need to be shown then the best approach is to include a separate Property Gains Schedule. This is produced from accounts 3000...3999. In this case accounts 3100...3129 are used for the first property, 3200...3229 for the second and so on. After the income and expenses have been entered, a journal is posted to carry the net property income from the Property Income Account to the Income Account. The accounts are used as follows:

It is possible to combine methods 2 and 3 if it is desired to show some expenses charged to individual properties and others that are not. The former is entered as in method 3 and shown on the Property Gains Schedule. Those not charged to individual properties are posted to accounts 1210...1229 as in method 2 and are shown on the Estate Capital Account Continued.

4000...4999 Assets and Liabilities as at Date of Death, and 9000...9999 Affidavit Accounts

These accounts are organised as per the IHT200 form. When the values are taken on as at the date of death the accounts in the 4000 range are debited and account 9010 is used as the contra account:

1. Debts of the deceased are posted as credits to accounts 4500...4599.
2. Accounts 4200...4239 are used for bank and building society balances. The associated accrued interest is posted to 4300...4339.
3. 9020 is the First Corrective Account. This means that if there is a correction then account 9020 can be used as the contra account. However, the accounts do not show the correction separately and the use of this account is optional.

5000...5999 Assets of Executors

The most important account in the range is 5164 for the client account. The intention is that accounts 5160...5169 are used for bank accounts relating to capital and accounts 5170...5179 are used for bank accounts relating to income. In most cases it is not necessary to keep the income assets separate from the capital assets and the Balance Sheet simply lists accounts 5000...5999 without distinguishing between them.

6000...6999 Liabilities of Executors

No attempt has been made to separate liabilities relating to income from those relating to capital and the Balance Sheet lists accounts 6000...6999 without distinguishing between them.

8000...8999 Beneficiary Accounts

These accounts are used for the Distribution Accounts.

9000...9999 Affidavit Accounts

See accounts 4000...4999 above.

ZZ00...ZZ99 Special Codes

• Accounts ZZ01 and ZZ02 are used together. They can be used to show a portfolio valuation figure on the face of the accounts. However, they are not normally used with Estate Accounts. See the documentation on the Trust Chart of Accounts for further details.
• The Suspense Account is used for control purposes and should have a zero balance by the time the accounts are produced.