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Where Taxpayers and Advisers Meet

Bare Trust Registration

pawncob
Posts:5090
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex
Bare Trust Registration

Postby pawncob » Thu Mar 17, 2022 1:37 pm

I hate to revisit this, but despite conflicting advice from TW and HMRC, I pose a simple question.
Bare trust, set up by uncle for minor nieces, £100k invested in shares producing c £2000 income.
Does the trust have to register with TRS?
Is the trust liable for tax on the income? No income paid to beneficiaries.
With a pinch of salt take what I say, but don't exceed your RDA

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Bare Trust Registration

Postby maths » Thu Mar 17, 2022 2:03 pm

Bare trusts and a need or not for Registration is not as straight forward as it may appear with HMRC adjusting the rules as it goes along.

However, I would suggest it is probably safer to register as there appears to be no specific exclusion in the legislation; there does;t appear to be a blanket exclusion from registration for ALL bare trusts.

Read TRSM23160 which indicates registration is necessary.

No, trustees are not liable on trust income; the income is that of the beneficiaries (minors or not).

pawncob
Posts:5090
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: Bare Trust Registration

Postby pawncob » Thu Mar 17, 2022 4:51 pm

As you say, it's in a state of flux.

https://www.gov.uk/guidance/register-a-trust-as-a-trustee

If your trust does not need to register for any reason other than having a liability to UK tax, you do not need to register it if:

it has to pay Income Tax of less than £100 on interest
only the settlor or beneficiary of the trust has to pay tax
it’s a bare trust
it holds a pension scheme already registered with HMRC
With a pinch of salt take what I say, but don't exceed your RDA

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: Bare Trust Registration

Postby AGoodman » Fri Mar 18, 2022 3:37 pm

I'm afraid this definitely needs to be registered under the new rules. From the website you linked to:

"The following types of trusts must register even if they have no tax liability:

all UK express trusts — unless they are specifically excluded"

I'm afraid the text you quoted above is dangerously misleading. It is basically saying that if you only need to register because of a tax liability (which might be because the trust is non-resident with UK income) you do not need to register if you are a bare trust.

However, most UK trusts now have to register because they are "UK express trusts" in addition to a duty arising from them having a tax liability.

The only relevant (but still inapplicable here) exclusion for bare trusts is limited to cash bank accounts, which was added as Para 6A Sch 3A by SI last week but hasn't yet made it into the online guidance.

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: Bare Trust Registration

Postby AGoodman » Fri Mar 18, 2022 3:38 pm

nb I don't mean you were dangerously misleading! I mean the Government guidance is hopeless.

pawncob
Posts:5090
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: Bare Trust Registration

Postby pawncob » Fri Mar 18, 2022 4:43 pm

Thanks both. I'll go with the flow.
With a pinch of salt take what I say, but don't exceed your RDA


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