Why Trustees must act now
Neil Shaw, Head of Personal Law at Yorkshire law firm LCF Law outlines why Trustees must take action now ahead of a looming new deadline.
Anyone who is a trustee will need to seek legal advice, as more trusts than ever before must now be registered with HMRC’s Trust Registration Service (TRS), ahead of the September 1st deadline.
A trust is a way of protecting wealth and passing assets to future generations in a controlled manner.
Although there’s a perception that trusts are created to avoid or reduce tax, there are many different reasons for creating a trust, for example providing for family members or future generations or safeguarding wealth against a risk of divorce or insolvency.
The trust structure has been around for generations and continues to be relevant today and can be created during lifetime or upon death.
New legislation being introduced means many trusts will have to be registered with the TRS by 1st September 2022. HMRC launched the TRS in 2017 to improve transparency around ownership of assets held in trusts.
The rules are complex. Trustees may need the help of lawyers or accountants to establish whether the trust needs to be registered and to guide them through the process. Those that miss the deadline will face financial penalties.
The TRS was originally for express trusts that are responsible for paying a relevant UK tax. The new rules extend the scope to all UK trusts and some non-UK trusts, regardless of whether there is tax to pay.
As part of the registration process, details must be provided, including information relating to the settlor, trustees, and beneficiaries. The information must be confirmed annually, and any changes must also be updated through the TRS within 90 days.
Some trusts fall outside of registration including those set up under intestacy rules; those created under a Court Order to hold compensation payments; those trusts holding jointly owned assets, such as the family home or a joint bank account.
LCF Law provides tailored advice to ensure that clients’ wealth passes to the people who are important to them in a tax efficient manner. LCF Law guide clients through the setting up of trusts, the initial registration and ongoing management.