New fine introduced for unregistered Trusts

HMRC introduced a new regulation, which commenced on the 1st September, stating that, with few exceptions, all UK trusts must now be registered with the Trust Registration Service (TRS), but what does this mean, and how does it affect current trustees, or people considering establishing a Trust?

Before 1 September 2022 people who held assets in Trust only had to register them when a liability to pay UK tax arose. However, these new rules mean that trusts that do not currently have a tax bill to pay must also be registered with the TRS, and failure to meet this legal obligation could result in trustees facing a £5,000 fine. 

Here are some key dates for trust holders to be aware of: 
•    Trusts created before 6 October 2020 or between 6 October 2020 and 2 June 2022 must have registered by 1 September 2022
•    Trusts created on or after 3 June 2022 must be registered within 90 days of creation.

What is a trust? 

Trusts are a way of gifting cash or other assets (the trust fund) to another individual/s without passing control of the trust fund to them.

There are three people involved in the creation of a trust fund, known as the ‘settlor’, the ‘trustee’, and the ‘beneficiary’.

•    Settlor - the person who makes the gift into the trust.
•    Trustee - the person who manages and oversees the trust, they also have control over when the trust funds can be accessed, and ensure they are distributed in line with the terms of the trust.
•    Beneficiary - the person who benefits from the trust 

It is also the trustees responsibility to safeguard the assets of a trust for the intended beneficiary/ies and it is important for them to be aware of changes in legislation. If you are a trustee of an existing trust and are looking for help in understanding what these new rules might mean for you, get in touch today for a free consultation with one of our financial planning experts.

Why trusts can be an important tool for financial planning 

There are several benefits to using trusts as a strategy for financial planning, some of the main advantages to trusts are: 
•    Allows you to create your own rules for how your assets are distributed.
•    Allows for charitable gifting free of tax. 
•    With a wills trust, it helps your beneficiaries avoid expenses and delays that comes with probate.
•    There is the availability for detailed family planning and unique abilities to allocate trust funds.
•    Maintains the integrity of your estate.  

A trust can be a really useful tool for establishing security and financial stability for yourself and your family now and in the future, thanks to their flexibility. Another important aspect of trusts is the fact you avoid probate delays which you usually face with inheritance tax and private fees after the death of a family member. In ordinary wills, you can’t access the assets until probate is granted, but as your trust is separate from your estate, your trustees are able to access assets or capital held in the trust immediately. Also, having complete control over the assets that are placed in the trust should provide the comfort of knowing you maintain control throughout the duration of the trust. 
Deciding when to create your trust should be matched to your needs. Whether it be including a trust in your will to be benefitted from after death, or creating one during your lifetime, we want you to feel fully informed about trusts and all the regulations and rule changes that come with them. For a further conversation about your trusts, changes to the registration rules, or whatever financial query you may have, get in touch today for a free consultation with one of our experts. 

The Private Office is an award-winning team of independent, Chartered Financial Planning experts working together to protect and grow your wealth. If you’re looking for financial advice, why not give us a call on 0333 323 9065 or book a free no-commitment initial consultation with one of our chartered advisers to find out how can help.

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