From the year 2018, UK government has made it mandatory to register a UK or non UK resident trust for the people who possess assets or has an income source in UK. Not adhering to the UK trust guidelines, one has to bear heavy penalty and even two year imprisonment. Therefore, it is important to get accustomed with the guidelines and requirements to build this trust.
If you have no idea about the operational function of a UK resident trust, then read on to get the apt information.
Conditions necessitating for you to register a trust with HMRC (HM Revenue and Customs)
Registering for UK resident trust with HM Revenue and Customs (HMRC) becomes crucial if you have any of the following liability to pay for.
- When filing for Capital Gains Tax
- In the case of Income Tax
- To register for Inheritance Tax
- Stamp Duty Land Tax in Scotland
- Stamp Duty Reserve Tax
- To claim tax relief
Conditions where you can avoid registering for the UK resident trust
Trustees are the most common parties who faces difficulty filing for the UK trust as they do not possess any UK assets or have a UK stream of income to make them claim for this type of trust. They ultimately do not have to register since the settlor is a UK resident and pays tax on income and gains.
When the trustees have right over a non UK resident trust, which trust has UK assets by means of a UK resident company. Because non UK resident parts If having assets owned by a UK company becomes UK resident trust as the assets or source of income is from UK. In this scenario, trustees have to pay for the UK taxes.
Trustees of a non UK resident trust who are not in possession of UK assets or UK source of income, do not have to register for the UK trust with HMRC. Even if the settlor holds UK assets or a source of income in UK.
Basic information needed to register for the UK resident trust
The main trustee who gets nominated in case of multiple trustees have the liability to file and pay for the due taxes. The lead trustees provides an agent who is responsible for offering the required information for filing for the UK resident trust.
He has to offer the following information:
The name, date of birth, national insurance number or unique taxpayer reference number. In case the lead trustee does not have any of it, he can provide his residential address. If he is a non UK resident, he has to give his ID number of passport, country of issue and the expiry date for the following individuals/entities:
a. settlor(s) even if dead,
b. trustees,
c. beneficiaries,
d. all the other persons/individual in control or having power over the trust (for example, an agent who appoint trustees or add or remove beneficiaries on the behalf of the lead trustee) and the type of control they have over the trust
e. all other persons recognized or registered as potential beneficiaries in the documentation of the trust, which includes a memorandum or a letter from the settlor.
All the above information gets registered into the UK trust register.
Analyst Shiv 