The information that the trustees must keep and give to advisers is extensive: for example, in relation to each of the beneficiaries, their full name and national insurance number or unique taxpayer reference.
If they have neither, their usual residential address must be kept and given. If that address is not in the UK, certain details on the individual’s passport or identification card need to be taken.
The individual’s date of birth and their role in relation to the trust needs to be recorded. The information required about beneficiaries is greatly reduced, though, where the person is among a class of beneficiaries, not all of whom have been determined.
In this case, providing the description of the class of persons who are beneficiaries, or potential beneficiaries, under the trust will suffice instead.
For those settlors wanting to lessen the regulatory burden therefore, using a discretionary trust, which by its nature does not give any beneficiary a vested interest, is likely to be the way forward.
It may also become more common to see a family company, registered in a jurisdiction in which there is no beneficial ownership register, being named as the sole object of a discretionary trust, rather than individual family members.
The changes do not affect just UK trusts. Any express UK trust, where all the trustees are resident in the UK, are firmly within the sights of the legislation.
However, if at least one trustee is UK resident (or, if a corporate trustee, it is a UK incorporated company) and the settlor was UK resident and UK domiciled at the time that the trust was set up or when the settlor added funds to the trust, the trust is also regarded as a UK trust.
Non UK trusts
Even non-UK trusts do not necessarily escape these new rules. They have the same record keeping and reporting obligations as UK trusts if they receive income from a source in the UK or hold assets in the UK as a result of which the trust is liable to pay certain UK taxes, including income tax, capital gains tax, inheritance tax and stamp duty land tax.
The trustees of any UK or non-UK trust which has UK tax liabilities also now have an additional reporting obligation.
As well as being obliged to self-assess their liability to UK taxes and submit a return to HMRC annually in the usual way, the new rules also oblige those trustees to supply beneficial ownership information and details about the trust.
This will include a statement of accounts for the trust, to HMRC by 31 January following any UK tax year in which the trustees are liable for UK tax.
