The Benefits of Discretionary Trusts

From: The Will Company

The manual for the UK Trust Registration Service (TRS) has been amended several times over September 2023, as HMRC continues to iron out details of the complex rules for compulsory registration.

Extra content on property held on behalf of minor children has been added to the section on excluded express Trusts. Where a Trust of land is created under Schedule 1(1) of the Trusts of Land and Appointment of Trustees Act 1996 (the 1996 Act) for property conveyed to one or more persons who are all under the age of 18 (a minor), the land is to be held in Trust for the benefit of those persons. If the property is conveyed to one or more minors and other persons over the age of 18, the land is held in Trust by the persons over the age of 18 for the benefit of themselves and the minor or minors. Trusts created in this way are excluded from registration, but only in the specific circumstances of Schedule 1 of the 1996 Act. The exemption does not extend to other Trusts of land held for minors.

The section on registrable estates now contains clarification on registration where the personal representative is a corporate body. The person registering the Trust must provide the full name and date of birth of the individuals acting on its behalf, as well as the name of the corporate body.

The guidance on complex estates has been updated, with a new link to guidance on reporting capital gains on property. Estates are classed as ‘complex’ and must be registered if the total income tax and capital gains tax (CGT) due for the administration period is more than GBP10,000. If there is no chargeable income or gains then there is no need to notify HMRC, either formally via TRS or under informal procedures. According to HMRC, in some instances, a timely CGT on UK property return may fulfil the notification requirement. This can be done online through HMRC’s UK property account and self-assessment service.

There is also further clarification of the information to be provided about the beneficiaries and potential beneficiaries of a Trust registering on TRS. The guidance now makes it clear that potential beneficiaries may include individuals referred to as such in documents from the settlor relating to the Trust, such as a Letter of Wishes.

Sources:

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