5 minute read
It feels a little late in the day and somewhat locking the door after the horse has bolted as Trusts that are caught by the new rules should have registered in the UK last September. It is worth having one last hard think about any Trust that you are connected to that hasn’t yet been registered.
You can register them yourself but if this seems a little daunting we can recommend a qualified person if you need an extra helping hand.
BACKGROUND
In recognition of the UK government obligations under the 4th Money Laundering Directive, trusts required to register, now do so through the Trust Regulation Service (TRS) and this first came into effect in June 2017.
In the past, HMRC required completion of a paper form to register a new trust. However, if there is/was no income arising, and no likelihood of income or gains in the future, you did not need to complete this form. This was a useful exclusion in situations where the trust fund simply comprised a non-income producing protection policy, endowment or whole of life policy or investment bond.
Lots of trust were set up by the financial services industry such as Loan Trust, Discounted Gift Trust, etc, with an underlying investment bond as their default so many Inheritance Tax saving trusts existed without the need for registration. That has now changed and all these trusts now need to be registered.
The TRS now provides a single online route for trusts to comply with their registration obligations and to obtain their Self-Assessment (SA) Unique Taxpayer Reference (UTR). Trusts require a UTR in order to submit the SA tax return.
WHAT TRUSTS ARE CAUGHT
& NOW HAVE TO REGISTER?
For many reding this summary the trusts that are likely to concern you as they do need to register with TRS are the trusts that result from a Will after the death of the testator and then remain in place for more than two years or the trusts that are set up during your lifetime with an aim of reducing inheritance tax.
If you would like to know more please contact us and we can offer some additional guidance.
WHICH UK TRUSTS ARE EXEMPT?
Trusts which do not need to register include those falling under these circumstances:
Pension schemes
Charitable trusts
Will trusts that are wound up within two years of death
Policy trusts paying out on death or critical illness
Existing trusts with a value of less than £100 created prior to 6 October 2020
WHAT NEXT?
The trustees are required to keep accurate and up-to-date written records of the beneficial owners, including settlors (the persons who established the trust), trustees, and beneficiaries. The lead trustee is also obliged to keep the register updated each year or when certain specific events occur and report any taxes.
ARE TRUSTS STILL WORTHWHILE?
They are still an excellent way to set capital aside to meet some very specific needs including the reduction of inheritance taxes. So even though there is more to do than there once was the tax savings can be very significant.
Most people will now have dealt with this issue but please have one last think about the trusts that might have been overlooked.
