Family trusts and registration deadline - 1 September
Updated: Jun 14
The following Trusts are some of the most common Trusts that we come across at Finch Tax.
Property Protection Trusts
Asset Protection Trusts
Life interest Trusts
Individuals often put these in place during their lifetime or on death via their Will as part of Inheritance Tax and/or Estate Planning. Trusts are used to help protect assets and trustees are appointed to look after assets on behalf of the ultimate owners (the beneficiaries).
But, in reality, there are many types of trusts including charitable trusts, pension trusts, trusts to hold life insurance etc.
The Registration requirement
Back in 2017, regulations came into force requiring Trusts to register with the Trust Registration Service (TRS) if they incurred a tax liability in any given tax year (and consequently had to prepare annual trust tax returns). So, for example, if a Trust held a property that was let and rental income was received, tax would be payable in this Trust and therefore the Trust should have been registered with the Trust Registration Service (TRS).
The regulations have now been extended so that non-taxable express Trusts must register with the TRS. The deadline for registering Trusts that were created before 6 October 2020 is 1 September 2022. Trusts set up after 6 October 2020 should be registered within 90 days.
Therefore, to work out whether or not you need to register a Trust you need to determine if it is an express trust or not. In practice, this means whether or not the Trust was deliberately created. There is usually a trust deed or a Will that creates an express trust.
If there is an express trust, you would need to check whether it falls under an exemption from registration. Such as Trusts set up for a bereaved minor (as defined by the Inheritance Tax Act), Trusts arising from personal injury payment, disabled persons trusts, UK registered pension schemes and charitable trusts to name a few.
If you are not sure whether your trust should be registered or not, please do not hesitate to contact us on 0116 216 7681 or email email@example.com.