Trusts are a useful means of preserving wealth. They allow assets to be passed down through the generations in a secure and tax efficient manner.
Trusts can include a range of assets – both existing family owned assets (such as properties or company shares) or newly acquired investments. They are a great way of providing funds for future generations, such as the payment of school or university fees for grandchildren. If used correctly, they are a useful tool for inheritance tax planning.
Global reporting requirements
There has been significant changes in global reporting standards in recent years, affecting trusts that hold financial investments as their main assets. The reporting requirements under Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standard (CRS) have become fairly onerous and difficult to navigate so it does make sense to get an expert to help you out.
Registration of trusts with HMRC
Another area of change, is the process of registering trusts with HMRC. You can no longer register Trusts with HMRC using paper forms. Trusts and estates must comply with their registration obligations electronically. The benefits of online registration include; avoiding potential loss or delay of paper forms in the post, only having to answer questions relevant to a particular trust type or estate and record-keeping – the ability to print a summary page for the trustees.
The online service allows lead and corporate trustees to build on existing tax reporting mechanisms.
All trusts with a UK tax consequence will need to be registered. Also it is the trustees’ responsibility to ensure the Trust Register is accurate and up-to-date. This will also include trusts which were originally registered with HMRC under the old system.
As a result, trusts remain one of the most versatile tax options for business or private asset owners. If you are looking to manage wealth for future generations, it may be worth considering this investment option.