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This is a freeview 'At a glance' guide to UK trusts and the Trust Registration Service (TRS).

What is a trust?  How are UK trusts taxed?

Subscribers: see UK Trusts and Trust Registration Service

At a glance

At a glance

Most trusts set up after 2006 are relevant property trusts subject to potential IHT charges under the 'relevant property regime':

Special trusts for disabled persons, bereaved children and those between the ages of 18 and 25 are not under the relevant property regime and have their own rules. See UK Trusts.

Discretionary Trusts (DT)

A discretionary trust will have a wide class of beneficiaries, generally unnamed and can include unborn children.

Interest In Possession (IIP) or life interest trusts

Where there is an interest in possession or life interest:

Bare trusts

These are informal types of trust. The income and capital of a bare trust belongs to the beneficiary; as a trustee you have control but if the beneficiary asks for the assets to be transferred to them it is hard for you to refuse.

Trust residency 

A UK trust is one which:

As an individual trustee, your residency is determined according to the Statutory Residence Test.

Inheritance Tax (IHT)

Excluded property:

Ten-year charges

Exit charges

When assets leave the trust, e.g. when distributions are made to beneficiaries, an exit charge is due:

If you are a trustee, you and the other trustees have responsibility for paying the tax on an exit; you can delegate this responsibility to the beneficiary if you wish.

See Trusts & Estates: Exit charge reporting requirements for what happens to the rate of tax if the trustees agree to pay the exit charge.

IHT Reporting requirements

Trustees are required to submit forms IHT100 even if there is no tax due unless certain conditions are met.

Income Tax

If you are a UK resident beneficiary with an interest in possession:

If you are the settlor and you have retained an interest in the trust:

Capital Gains Tax (CGT)

As a trustee you can claim certain CGT reliefs on trust gains, subject to certain conditions:

Holdover relief is important:

Reporting requirements for Income Tax and Capital Gains Tax

As a trustee, you are required to file Self Assessment returns for the trust in respect of income and capital gains.

Stamp Duty Land Tax (SDLT)

A transfer into trust is a gift with no consideration; property can be put into or taken out of a trust with no SDLT charge unless the trustees/beneficiaries take on any borrowing attached to the property.

5MLD

The trusts register is to be expanded as part of the UK's compliance with the EU Fifth Money Laundering Directive (5MLD) from 10 January 2020. A Consultation was opened into this in April 2019, with a Further consultation in January 2020. The proposals will require all UK express trusts and some non UK express trusts to report to HMRC through an amended Trust Registration Service (TRS) whether they have UK tax liabilities or not. The original deadline for this was March 2022, but this has been extended. See Trust Registration Service

Useful guides on this topic

UK trusts
What is a trust? What types of trust are there? How are UK trusts taxed? 

Non-resident trusts
When is a trust non-resident? What are the UK tax implications of a non-resident trust?  What are the UK tax implications for any beneficiaries? What are the UK administrative requirements for a non-resident trust?

Trusts & Estates: Ten-year charge reporting requirements 
What is the ten-year charge (or principal or periodic charge) and when does it apply?

Trusts & Estates: Exit charge reporting requirements
What is an exit charge (or proportionate charge) and when does it apply?

Trusts & Tax planning
What is a trust? How can trusts be used in tax planning? What are the advantages and what are the pitfalls?

Trust Registration service

From July 2017 certain trusts must be registered with HMRC under an Online registration system. The scope of this has gradually widened. 

Trusts must register where they:

For registration deadlines, see Trust Registration Service.

See Trust Registration Service

 


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