How to Register a Trust in the UK

To create a trust, you will need to familiarise yourself with the legalities involved in this process. Lending you a helping hand, Prestige Tax and Trust Services explains how to register a trust in the UK.

Setting up trusts

A trust is a separate legal entity which holds assets e.g. money, for the benefit of another person. Trusts are incredibly versatile and flexible vehicles, so you can use them for a number of purposes. This includes protecting assets, passing assets onto a loved one (both while you are alive and after you have died) and reducing your tax bill, among other things.

Setting up a trust involves drawing up a trust deed. Within this document, you will need to name the settlor – the person who is putting assets into the trust i.e. yourself. Also you will need to appoint trustees – the people who manage the assets held in the trust and beneficiaries, who benefit from it.

Selecting trustees

It is important that you select your trustees carefully, for a number of reasons. The trustees are the legal owners of the assets held in the trust, and are responsible for managing the vehicle day-to-day, as well as ensuring the trust meets its tax obligations. What qualities should you look for in trustees?

Select trustees who are honest, so you can depend on them to act transparently when managing the trust. You should also pick someone who possesses a responsible nature, so they can handle the many tasks involved in trusteeship and who has experience with financial and legal matters, so they can handle the trust’s tax obligations effectively. For instance, it will be their responsibility to register the trust with HM Revenue and Customs (HMRC), the government’s tax agency, for tax purposes.

Registering trusts

For tax purposes, if you have appointed multiple trustees, select one as the ‘principle acting trustee,’ who will ensure the trust meets its tax obligations. They will be required to register the trust with HMRC, so it can pay any applicable income tax, capital gains tax and inheritance tax. The other trustees will still be held accountable if the trust does not pay its taxes and could be charged tax and interest.

Your principal acting trustee must register the trust by 5th October of the tax year during which you either created the trust or it started to produce income/chargeable gains, if the latter event occurs later. They will need to complete form 41G and submit it to HMRC’s trust and estates department. Within 15 working days of sending the form, your principal acting trustee will receive the Unique Taxpayer Reference that they will need to submit the trust’s yearly tax returns to HMRC.

Prestige Tax and Trust Services

Selecting a trustee who has the ability to register your trust with HMRC is just of the issues you will need to consider when creating a trust. UK trust law can be complex, so it is wise to seek expert aid to help you navigate these matters. Prestige Tax and Trust Services’ team has the legal acumen and experience required to provide advice on trust issues, so you can set a trust up properly.

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