Most people have heard of "trusts". Often they are assumed to be extremely complex and derived by lawyers who like to over complicate matters. The truth is that a trust can be one of the most useful tools available to individuals and can be used to achieve many different objectives.
From care fee protection to mitigating inheritance tax on death to ensuring assets stay in the family after death or divorce, a Trust can be used to help achieve these aims.
Most trusts need to be registered with HMRC and this was previously dealt with by completing form 41(G). This form was withdrawn at the end of April 2017 and can no longer be used but a new electronic registration system came online for trustees at the end of July 2017. Agents should be able to register trusts for their clients from Autumn 2017.
Trustees have a responsibility to ensure the trust is registered and this applies to both new and existing trusts. Even if an annual self-assessment return is completed by the trustees it is still necessary to register the trust using the new online system. For existing trusts HMRC will already hold the majority of the information the online system requires and this should be completed automatically by the system but there will be some additional information that needs adding. Thereafter the register will only need updating when any of the registered details change.
At the time of writing there is conflicting information for the deadline for registering a new trust. The regulations state 31 January after the tax year end in which the trust is created or when it starts to make income or chargeable gains, but the HMRC website gives a date of 5 October after the end of the tax year - this ties in with the self-assessment registration deadline. As a new trust can’t obtain a self-assessment reference without registration it would seem logical to aim for the earlier deadline.
Bare trusts, i.e. where an asset is held in the name of the trustee for a beneficiary who is entitled to both income and capital, do not need to be registered.
The new system should make communications with HMRC simpler but as a trustee first looking at the register you may have questions on how to complete it and what information you should include.
We act as professional trustees on numerous trusts which we have had to register using the new online system and so would be happy to advise you and your fellow trustees on your obligations and assist with your registration.
If you would like to discuss how we can assist you with the registration of an existing trust, or you wish to understand how the creation of a trust could help you and your family, please contact Marc Dorsett on 01245 228146.