New HMRC statistics show that the total number of new trust registrations in the 12 months to 31 March 2023 hit 462,000 – a substantial increase over the 33,000 registrations in the previous 12-month period. The dramatic increase reflects the 1 September 2022 deadline for the registration of UK trusts, including those with no tax liability (other than exempt trusts), via the trust registration service.
The requirement for all UK express trusts and certain non-UK express trusts to register has brought greater clarity to the position on beneficial ownership of trusts, as Paul Falvey, tax partner at BDO notes: ‘Previously the number of trusts in existence and the identity of their beneficial owners was rather obscure. Following the introduction of the trust registration service, and the widening of the net in terms of the trusts which are required to register, we now have a much clearer idea of the size of the market and HMRC has much greater clarity of ownership.
‘The increased compliance and reporting requirements has led to a general decrease in the use of trusts. The point at which it is not commercially sensible to establish a trust has increased as the annual running costs of a trust make smaller settlements less appropriate.
‘However, for some people, there are still good reasons to consider using a trust – for both non-tax and tax reasons. Trusts still offer families an effective means of passing wealth down the generations whilst providing protection for marital breakdown, family disputes, bankruptcy and beneficiaries who may be unable to manage their own affairs.’
New HMRC statistics show that the total number of new trust registrations in the 12 months to 31 March 2023 hit 462,000 – a substantial increase over the 33,000 registrations in the previous 12-month period. The dramatic increase reflects the 1 September 2022 deadline for the registration of UK trusts, including those with no tax liability (other than exempt trusts), via the trust registration service.
The requirement for all UK express trusts and certain non-UK express trusts to register has brought greater clarity to the position on beneficial ownership of trusts, as Paul Falvey, tax partner at BDO notes: ‘Previously the number of trusts in existence and the identity of their beneficial owners was rather obscure. Following the introduction of the trust registration service, and the widening of the net in terms of the trusts which are required to register, we now have a much clearer idea of the size of the market and HMRC has much greater clarity of ownership.
‘The increased compliance and reporting requirements has led to a general decrease in the use of trusts. The point at which it is not commercially sensible to establish a trust has increased as the annual running costs of a trust make smaller settlements less appropriate.
‘However, for some people, there are still good reasons to consider using a trust – for both non-tax and tax reasons. Trusts still offer families an effective means of passing wealth down the generations whilst providing protection for marital breakdown, family disputes, bankruptcy and beneficiaries who may be unable to manage their own affairs.’
