Trusts FAQ

Occupational pension schemes need to register as trusts if they’re either UK express trusts or non-UK express trusts with UK source income or UK assets and when their trustees are liable to pay UK taxes on trust income or assets.

Underlying companies involved with trusts may need to register that with Companies House by using the page at www.gov.uk/government/organisations/companies-house and it’s worth checking that or having your solicitor do so on your behalf.

Not necessarily. Not if, after tax relief, there is no liability to pay tax. This might be because, for example, the trust’s dealings are conducted entirely overseas in every respect.

The trust needs to keep and provide proper records on demand. But, for example, it is allowed to return details on classes of beneficiaries rather than list the details of every single individual (something that would be onerous).

Online. At www.gov.uk/government/publications/trusts-and-estates-trust-details-41g-trust.Your solicitor can do this for you. But the data-entry needs to be completed within 28 days so you can do that in chunks, using the ‘save for later’ facility.

Trustees are not expected to undertake a formal valuation but part of their professional duties is to provide a good estimate of the market value of the assets. For more information on that they could refer to either the Capital Gains and Other Taxes manual published by the Valuation Office Agency (section 5 refers to the Taxation and Chargeable Gains Act) or the Capital Gains manual (see CG16200C onwards). See www.gov.uk/guidance/capital-gains-and-other-taxes-manual. Furthermore HMRC’s Shares and Assets Valuation Office can offer advice on specific assets such as company shares.

There is no requirement for trustees to publicise details of the trust. But the Trusts Registration Service (TRS) will share that data with HMRC and law enforcement agencies as necessary. Those law enforcement agencies include the Financial Conduct Authority (FCA), the National Crime Agency (NCA), all police forces maintained under section 2 of the Police Act 1996(a), the Police of the Metropolis, the Police for the City of London, the Police Service of Scotland, the Police Service of Northern Ireland and the Serious Fraud Office (SFO).

Mixed trusts are a combination of types of trust that are treated according to different tax rules.

Non-resident trusts allow the trustees to reside outside the UK for tax purposes, and are infamous for the complexity of the implications for their taxation.

Settlor-interested trusts are where the settlors, spouses or civil partners benefit from an interest in possession trust, an accumulation trust or a discretionary trust.

This includes capital gains tax, income tax, inheritance tax, stamp duty land tax as well as stamp duty reserve tax. In Scotland there is also land and buildings transaction tax.

If a trust is non-compliant then it and trustees face sanctions but legislation requires that any civil penalty imposed must be proportionate to the offence committed.

If you wish to register with the Trusts Registration Service (TRS) but lack some of the data you need then you should go ahead and register anyhow.

Your solicitor can be your agent, in which case you’ll need to register their details so that they can represent you. Or, better still have them do it for you.

If the trust closes then historic data is not kept on the register after HMRC has been properly informed.

You’ll need details of trust assets including UK property addresses and their market valuations, the identity of the settlor as well as the trustee(s) and any other person who is or will be exercising effective control over the trust and some or all of its beneficiaries.

You’ll also need names and dates of birth, personal and company addresses, telephone numbers, National Insurance numbers (NINOs) for UK residents unless they are under 16 years old, UTRs where already available, passport details for UK residents and passport or ID numbers for non-UK residents if they don’t have a NINO. You’ll want passport and ID numbers, countries of issue and expiration dates. You will want those even for the possibly-deceased settlor.

These details will span the following: Lead Trustee Individual, Lead Trustee Company, Additional Trustee Individual, Settlor Individual, Settlor Company, Beneficiary Individual, Beneficiary charity/company/another trust, Protector etc. Individual, Protector etc. Company and Other Individuals. 

The person to whom the HMRC will go if there are several trustees.

The government describes a bare trust as one where assets are held by a trustee and where the beneficiary (or beneficiaries) can get all the capital and income once they’re 18 (in England and Wales) or 16 (in Scotland). So the assets will always go directly to the intended beneficiary (or beneficiaries).

Bare trusts let assets pass to young people but the trustees look after them until the beneficiary is old enough.

A complex estate is one that fails to meet the conditions for using the informal payment procedures defined within the Trust and Estate Settlement Manual (TSEM7410). You can get a copy of this at www.gov.uk/hmrc-internal-manuals/trusts-settlements-and-estates-manual/tsem7410.

A CREST transaction is a form of electronic transfer of funds which requires confirmation of the transaction by both parties. Its relevance is cited in respect of registrations of trusts having to follow such transactions.

Discretionary trusts are where trustees have some flexibility on how to use the trust income and, sometimes, the capital. Depending on the trust, trustees can decide what is paid out in respect of income or capital), which beneficiary or beneficiaries will receive payments and when, and they can impose conditions on the beneficiary or beneficiaries too. Discretionary trusts are sometimes set up to put assets aside for future needs like at-risk grandchildren who may have special needs and who might never be able to handle everything themselves.

An accumulation trust lets the trustees can accumulate income and add it to the trust’s capital. They may also be able to pay income out, as with discretionary trusts.

An Employee Ownership Trust.

HM Treasury states: ‘The term “express trust” should be taken to mean a trust that was deliberately created by a settlor expressly transferring property to a trustee for a valid purpose, as opposed to a statutory, resulting or constructive trust.’

Interest in possession trusts are where the trustee passes (or trustees pass) on all trust income, less expenses, immediately to the beneficiary or beneficiaries.

A Statutory Instrument.

A Unique Tax Reference.

Capital Gains Tax.

Her Majesty’s Treasury.

Inheritance Tax.

Interest in Possession.

Self-Assessment.

Stamp Duty Land Tax.

Stamp Duty Reserve Tax.

The administrative burden on trustees can, of course, be irksome. But the government agencies try not to make it harder than it ought to be in recognition that trustees are providing a valuable service and are often busy professionals.

The Financial Conduct Authority.

The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (SI No. 2017/692). You can get a download of this at www.legislation.gov.uk/uksi/2017/692/pdfs/uksi_20170692_en.pdf

The maximum number of trustees you can register online is 5. You can have more, and register more, but not do so online. The rest have to be added in writing to Trusts, HM Revenue and Customs, BX9 1EL.

The National Crime Agency.

Registration must follow the first chargeable event because that triggers UK tax liabilities. But they vary. For inheritance tax you have 6 months. For stamp duty land tax you have 30 days. But for stamp duty reserve tax it must be within 14 days of CREST transactions or by the 7th day of the month following non-CREST transactions.

The Trusts Registration Service. It deals with trusts and complex estates. Each has to register with the TRS for the purposes Self-Assessment (SA) and getting their Unique Taxpayer Reference (UTR). So this is the trust gateway to the HMRC.

When they realise that there are going to be tax liabilities it becomes critical that registration takes place. Otherwise the trustees can be penalised. But different deadlines are applicable so you’d be best asking Goodwills.

Accordion ContentBoth UK express trusts where trustees have tax liabilities (in respect of capital gains tax, income tax, inheritance tax (IHT) and stamp duty land tax (SDLT) as well as stamp duty reserve tax (SDRT) – in Scotland there is also land and buildings transaction tax) and non-UK express trusts which have taxable income from the UK or assets here.

The trustees. Though they can appoint an agent such as a solicitor to do it for them.

Yes. Or your solicitor can do it. But via www.gov.uk/government/organisations/hm-revenue-customs/contact/trusts.