A trust is a way of holding assets such as investments, money, buildings and land for people (who are known as the beneficiaries). There are different types of trusts each with different rules and treatments.
All trusts must be managed by trustees. The trustees are the legal owners of the assets which are held in a trust. Their role includes dealing with the trust’s assets, managing the trust on a day-to-day basis and paying any tax. They will also be involved in deciding how to invest or utilise the trust’s assets.
A trust could have been established for one of several reasons which can include:
Whilst trusts can be very effective in achieving these aims, they do involve a good deal of responsibility as far as the trustees are concerned. In recent times trusts have become subject to more scrutiny, taxation and legislation.
Another sweeping change is due to come into force with effect from 10th March 2020 in that most new trusts will need to register with the Trust Registration Service (TRS) within 30 days of creation. Up to now, some trusts have not needed to register – for example, those just holding a life assurance policy. Trusts which had a “tax consequence”, however, have been required to register for some time. Existing trusts are thought to have up to 31st March 2021 to comply.
It is anticipated that the number of trusts that will need to register will multiply as a result of the new rules.
The legislation is part of an EU Directive, but the outcome of Brexit negotiations will not have an effect as the UK is committed to its introduction in any event.
A series of penalties currently exist for late registration and these are likely to be reviewed.
The proposals are currently subject to consultation, but we wanted to make our many trust clients aware of these as soon as practical. If you have any questions whatsoever, please don’t hesitate to contact your usual Chancellor adviser.