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Where Taxpayers and Advisers Meet

Bare Trusts and registration

RJL71
Posts:3
Joined:Mon Aug 08, 2022 5:07 pm
Bare Trusts and registration

Postby RJL71 » Mon Aug 08, 2022 5:19 pm

I set up a Hargreaves Lansdown account for each of my children in 2012.These are designated accounts. I did set them up as Bare Trusts ( if filling a form in at home is all it takes?).

Each holds less than 20k in funds. They have never paid out any income.

So I was wondering if :
a) I need to register these for the September deadline?
b) if so is the accrued income (actually accumulation units) deemed a tax liability for the years these have been held (since 2012)?

Sorry for the basic questions but have only just become aware of the need to register.

Any help much appreciated.

pawncob
Posts:5089
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: Bare Trusts and registration

Postby pawncob » Tue Aug 09, 2022 9:54 am

Yes you need to register.
Income belongs to beneficiaries. Unlikely to be any tax liability (depending on their other income)
With a pinch of salt take what I say, but don't exceed your RDA

AGoodman
Posts:1734
Joined:Fri May 16, 2014 3:47 pm

Re: Bare Trusts and registration

Postby AGoodman » Tue Aug 09, 2022 10:26 am

Except that, if you funded the accounts yourself (rather than, say, grandparents) then while your children are under 18, the income is treated as yours for tax purposes.

Parky1
Posts:16
Joined:Sun Feb 09, 2020 5:52 pm

Re: Bare Trusts and registration

Postby Parky1 » Tue Aug 09, 2022 4:51 pm

I have similar accounts for my grandchildren with another provider, who have advised me that registration is not required if there is no trust deed (which is the case). That would be convenient, if true, but I suspect they may be incorrect,as "trustees" are mentioned on the original application form.

RJL71
Posts:3
Joined:Mon Aug 08, 2022 5:07 pm

Re: Bare Trusts and registration

Postby RJL71 » Tue Aug 09, 2022 5:16 pm

Thanks all. I think I will get in touch with the provider initially to see what documentation they have.

Otherwise I will register. I did look at the process and it does ask if the trust is liable to tax. I am not sure what that really means , any liabilities are well within my children's personal tax allowances, but I think it may not mean that.

Thanks again for all your comments so far. Appreciated.

AGoodman
Posts:1734
Joined:Fri May 16, 2014 3:47 pm

Re: Bare Trusts and registration

Postby AGoodman » Tue Aug 09, 2022 5:43 pm

I have similar accounts for my grandchildren with another provider, who have advised me that registration is not required if there is no trust deed (which is the case). That would be convenient, if true, but I suspect they may be incorrect,as "trustees" are mentioned on the original application form.
Somebody appears to have been giving duff advice to a few of the investment platforms as it's now clear that a trust deed isn't required. If anything, HMRC have been giving "express trust" the widest possible definition.

RJL71
Posts:3
Joined:Mon Aug 08, 2022 5:07 pm

Re: Bare Trusts and registration

Postby RJL71 » Wed Aug 10, 2022 11:40 am

Seems safest to register. A pain for very little gain...

I have started the process on HMRC's website and get asked the years of tax liability. Around half the years the income was more than £100, so is the trust eligible for tax just for those years?

Apologies for what may be a daft question.

dibby20159
Posts:4
Joined:Tue Aug 16, 2022 9:30 am

Re: Bare Trusts and registration

Postby dibby20159 » Sun Sep 04, 2022 9:59 am

I know this thread is a month old, but I have recently gone through a similar trauma in registering trusts for my grandchildren, getting various conflicting opinions. Eventually a friend who is a chartered accountant came and sat with me while I went through the registration process - setting me right on one or two points along the way. (And the only cost was a couple of botles of wine afterwards!)

In a nutshell the trusts are not taxable, in that any income is that of the grandchildren. So the trust bears no reponsibility for paying any tax on the income - that would fall to the grandchidren. But since any income will (at least in the case of my grandchildren) not exceed their personal allowance of £12,500 per year (if only!) there will be nothinbg to pay.

So the questions about years of tax liability are irrelevant. It may be that the poster above who was asked for that information may have said (earlier in the registering process) that he was doing the registration on behalf of an individual - in which case he will have got into reams of financial questions. He should (and it took me a long time to realise this) have said that he is doing it on behalf of an organisation (i.e. the trust) in which case he wouldn't get all those irrelevant questions.

I too had similar erroneous information from Hargreaves Lansdown. Whether that was an error on the part of HL or due to incorreect information from HMRC I don't know.

All in all though, the whole thing is a mess and ill thought through by those drafting the legislation and/or the registration process.


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