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Where Taxpayers and Advisers Meet

Will bare trusts for children need to be registered?

uncle john
Posts:15
Joined:Mon Nov 21, 2016 12:15 pm
Will bare trusts for children need to be registered?

Postby uncle john » Thu Jul 08, 2021 11:46 pm

I gather that there's been an extension to the kind of trusts which will have to be registered.

We have set up bare trusts for our minor grandchildren, to hold unit trusts etc for them until they're 18.
The income and capial gains from these assets are quite small, and easily covered by the children's own exemption limits.
Is there yet any certainty as to whether such trusts will need to be registered, and if so, what are the deadlines?

thanks

AGoodman
Posts:1286
Joined:Fri May 16, 2014 3:47 pm

Re: Will bare trusts for children need to be registered?

Postby AGoodman » Fri Jul 09, 2021 1:08 pm

Yes, i'm afraid so.

The deadline for first registration is 10 March 2022.

You fall under Category A in para 45ZA of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (SI 2017/692)

available here: https://www.legislation.gov.uk/uksi/2017/692/regulation/45ZA

And yes, it is ridiculous. And yes, there will be massive non-compliance...

uncle john
Posts:15
Joined:Mon Nov 21, 2016 12:15 pm

Re: Will bare trusts for children need to be registered?

Postby uncle john » Fri Jul 09, 2021 4:55 pm

Thanks - I absolutely agree that it's pointless - totally disproportionate.

If I could further ask - is there any suggestion that the tax regime might change from being taxed on the child, as it is now, to that of the trust regime - and ditto for the Legal Entity Identifier? Imposing both those would surely be even more ridiculous.

AGoodman
Posts:1286
Joined:Fri May 16, 2014 3:47 pm

Re: Will bare trusts for children need to be registered?

Postby AGoodman » Thu Jul 15, 2021 2:46 pm

No, this is an entirely standalone initiative driven by the European Commission who didn't understand/like the use of trusts in the UK and apparently David Cameron didn't understand the implications either.

It's not really meant to be a tax initiative at all - it's just been given to HMRC as it's rather helpful to them and they've combined it with their pre-existing registration of trusts with a tax liability.

uncle john
Posts:15
Joined:Mon Nov 21, 2016 12:15 pm

Re: Will bare trusts for children need to be registered?

Postby uncle john » Sat Jul 17, 2021 3:12 pm

Thank you very much for your help.

pawncob
Posts:4749
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: Will bare trusts for children need to be registered?

Postby pawncob » Wed Aug 04, 2021 3:55 pm

Your trust is probably exempt.
https://www.gov.uk/trusts-taxes/registering-a-trust
With a pinch of salt take what I say, but don't exceed your RDA

AGoodman
Posts:1286
Joined:Fri May 16, 2014 3:47 pm

Re: Will bare trusts for children need to be registered?

Postby AGoodman » Wed Aug 04, 2021 4:52 pm

Pawncob - I'm fairly confident your link has not yet been updated to reflect MLD5. It describes the rules now but they are changing (in fact the amendment came into force on 6 October 2020). The 2017 Regs on legislation.gov.uk are also nearly a year out of date.

Most bare trusts, other than for home ownership, have to be registered by 10 March. It's a bit of a scandal that HMRC have not yet updated their advice but that is perhaps because they have not yet updated their software and process for registering all these additional trusts. They don't want people to try to register until they're good and ready.

The only exempt trusts are listed in Schedule 3A to the 2017 Regs, which is available here:

https://www.legislation.gov.uk/uksi/2020/991/regulation/11/made

someone
Posts:521
Joined:Mon Feb 13, 2017 10:09 am

Re: Will bare trusts for children need to be registered?

Postby someone » Wed Aug 04, 2021 7:00 pm

The only exempt trusts are listed in Schedule 3A to the 2017 Regs, which is available here:

https://www.legislation.gov.uk/uksi/2020/991/regulation/11/made
Does 'property' mean bricks and mortar or any property?

I cannot see joint bank accounts being excluded from registration if it does mean buildings.

AGoodman
Posts:1286
Joined:Fri May 16, 2014 3:47 pm

Re: Will bare trusts for children need to be registered?

Postby AGoodman » Wed Aug 04, 2021 9:43 pm

Yes, i'd remembered wrongly. The co-ownership exemption would include joint bank accounts provided the account holders were also the beneficial owners.


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