Bare Trust

[Leither]

I set up separate bare trusts for the grandchildren through a stockbroker many years ago. The children are named as beneficiaries in the accounts. The first will be 18 this year and I wish to pass the proceeds over. I shall probably liquidate the investments and transfer cash.

The broker is unable to add the beneficiary's bank account details to the account so suggests the beneficiary opens a separate account and then I can request the transfer of funds.

But does anyone know, would it be permissible for me to withdraw all the funds & immediately transfer these immediately to the beneficiary or would that invalidate the trust, rendering me liable to tax?

Regards,

Leither.

[scrumpyjack]

I set up separate bare trusts for the grandchildren through a stockbroker many years ago. The children are named as beneficiaries in the accounts. The first will be 18 this year and I wish to pass the proceeds over. I shall probably liquidate the investments and transfer cash.

The broker is unable to add the beneficiary's bank account details to the account so suggests the beneficiary opens a separate account and then I can request the transfer of funds.

But does anyone know, would it be permissible for me to withdraw all the funds & immediately transfer these immediately to the beneficiary or would that invalidate the trust, rendering me liable to tax?

Regards,

Leither.

It would have no tax consequences for you as the beneficiary would continue to be the beneficial owner of the assets throughout.
It is worth noting in your tax return any transactions you have carried out in your name but where the beneficial owner is the grandchild. That will avoid any chance of HMRC accusing you of omitting things from your tax return (they receive data from banks and brokers). I have been in this situation myself several times and noted in my tax return that the transactions are not included in my return for that reason.

[tjh290633]

I have 4 bare trusts for my grandchildren. With the change in income tax allowances, it will be worthwhile for my eldest, approaching 23, to take ownership of her trust and move into into a shared ISA in two stages. She is in Wigan, now hosted by HL. The second, approaching 21 already has had hers transferred at the managers (Columbus Threadneedle) insistence. Their predecessors, F&C Asset Management, were the only ones to insist that the trust be registered. Nobody else did.

I have continued to make monthly payments into No.2's GIA, where the shares in FCIT reside. Again, she needs to move a large amount into an ISA.

No.1's brother is in Alliance Trust, now held with II, and the time is approaching for him to take action, having not long had his 20th birthday.

The final one is No.2's brother, currently 14, and is also in FCIT with CT. No current need for action.

TJH

[scrumpyjack]

I have 4 bare trusts for my grandchildren. With the change in income tax allowances, it will be worthwhile for my eldest, approaching 23, to take ownership of her trust and move into into a shared ISA in two stages. She is in Wigan, now hosted by HL. The second, approaching 21 already has had hers transferred at the managers (Columbus Threadneedle) insistence. Their predecessors, F&C Asset Management, were the only ones to insist that the trust be registered. Nobody else did.

I have continued to make monthly payments into No.2's GIA, where the shares in FCIT reside. Again, she needs to move a large amount into an ISA.

No.1's brother is in Alliance Trust, now held with II, and the time is approaching for him to take action, having not long had his 20th birthday.

The final one is No.2's brother, currently 14, and is also in FCIT with CT. No current need for action.

TJH

You have a legal responsibility to register the bare trust with the Trust Registration Service, whether or not the investment manager tells you to.
Utter waste of time!
https://www.gov.uk/guidance/register-a- ... -a-trustee

[SebsCat]

You have a legal responsibility to register the bare trust with the Trust Registration Service, whether or not the investment manager tells you to.
Utter waste of time!
https://www.gov.uk/guidance/register-a- ... -a-trustee

The first part of that page should just be:

Who should register
You must register your trust with HMRC:
* to make sure you and the trust comply with anti-money laundering regulations

Given that one requirement, the rest of the section is spurious.

[tjh290633]

You have a legal responsibility to register the bare trust with the Trust Registration Service, whether or not the investment manager tells you to.
Utter waste of time!
https://www.gov.uk/guidance/register-a- ... -a-trustee

The first part of that page should just be:

Who should register
You must register your trust with HMRC:
* to make sure you and the trust comply with anti-money laundering regulations

Given that one requirement, the rest of the section is spurious.

When was that requirement brought in?

TJH

[scrumpyjack]

Last year or the year before. It's quite recent

[Howard]

The first part of that page should just be:

Given that one requirement, the rest of the section is spurious.

When was that requirement brought in?

TJH

You may remember contributing to this discussion.

viewtopic.php?p=524391#p524391

I believe you may have registered your trusts in Aug 22?

regards

Howard

[tjh290633]

When was that requirement brought in?

TJH

You may remember contributing to this discussion.

viewtopic.php?p=524391#p524391

I believe you may have registered your trusts in Aug 22?

regards

Howard

Only those holding FCIT. H-L have now changed the name of the holding in Witan to "Bare Trust for Jane Doe" and II have done nothing.

TJH

[tjh290633]

You have a legal responsibility to register the bare trust with the Trust Registration Service, whether or not the investment manager tells you to.
Utter waste of time!
https://www.gov.uk/guidance/register-a- ... -a-trustee

The first part of that page should just be:

Who should register
You must register your trust with HMRC:
* to make sure you and the trust comply with anti-money laundering regulations

Given that one requirement, the rest of the section is spurious.

Look again.

When to register taxable trusts that were created before 6 April 2021
Trusts that are liable for Income Tax or Capital Gains Tax for the first time

Register your trust on or before 5 October in the tax year after the one in which the trust both:

starts to receive any income or has capital gains
becomes liable for Income Tax or Capital Gains Tax

For example, if your trust received some interest for the first time in May 2019 (the 2019 to 2020 tax year) and became liable to Income Tax, you should have registered on or before 5 October 2020 (in the 2020 to 2021 tax year).

Changes in the tax liability for dividends have brought some into this requirement.

TJH

[scrumpyjack]

The first part of that page should just be:

Given that one requirement, the rest of the section is spurious.

Look again.

When to register taxable trusts that were created before 6 April 2021
Trusts that are liable for Income Tax or Capital Gains Tax for the first time

Register your trust on or before 5 October in the tax year after the one in which the trust both:

starts to receive any income or has capital gains
becomes liable for Income Tax or Capital Gains Tax

For example, if your trust received some interest for the first time in May 2019 (the 2019 to 2020 tax year) and became liable to Income Tax, you should have registered on or before 5 October 2020 (in the 2020 to 2021 tax year).

Changes in the tax liability for dividends have brought some into this requirement.

TJH

Bare Trusts are NOT taxable trusts but they still have to be registered.
Income and gains in a bare trust as taxable on the beneficiary personally. The bare trusts are not taxable as a separate entity. So for my grandchildren, aged 9, 7 and 4, the dividends on the shares I gave them are taxable on the children and we complete normal self assessment returns for them. The bare trusts are not taxable entities!

When establishing the Trust Registration system, HMG dithered for a long time on whether non taxable trusts, such as bare trusts, needed to register. In the end they decided they did have to register.

[Leither]

Well thanks for all the posts, interesting reading. I take away from them two things:

1. I need to register the trusts; a bit late for the one in question as I'll soon release the funds but I suppose better late than never.

2. I can transfer the funds to the beneficiary by transferring the cash from the bare trust to myself and then transferring that cash immediately to the beneficiary, without incurring any tax liability for myself.

Regards,

Leither.

[gryffron]

Well thanks for all the posts, interesting reading. I take away from them two things:…

3. Don’t forget you also need to DE-Register the trusts once all the money is paid out. (Same website)

And yes, steps 1 & 3 are still worth doing, even though they may happen in quick succession. You can be fined for failing to do so, and it can make your tax position harder.

Registering and Deregistering is really quick. Online, free, takes only a few minutes. Don’t be deterred.

Gryff

[GoSeigen]

2. I can transfer the funds to the beneficiary by transferring the cash from the bare trust to myself and then transferring that cash immediately to the beneficiary, without incurring any tax liability for myself.

You can do this if you don't have a broker like Hargreaves Lansdown that blocks access to your account for nine months demanding documentation of the long-dead settlors of the bare trust and takes weeks to answer secure messages on their own system and refuses to fix errors in the information held about the account.

Hope your brokers are a bit more understanding.

GS

[Leither]

Both accounts are with AJ Bell who are normally quite efficient but thanks for the warning.

Regards,

Leither.

[Leither]

Well thanks for all the posts, interesting reading. I take away from them two things:…

3. Don’t forget you also need to DE-Register the trusts once all the money is paid out. (Same website)

And yes, steps 1 & 3 are still worth doing, even though they may happen in quick succession. You can be fined for failing to do so, and it can make your tax position harder.

Registering and Deregistering is really quick. Online, free, takes only a few minutes. Don’t be deterred.

Gryff

Thanks for that, much appreciated.

Regards,

Leither.

[Leither]

OK, trusts duly registered with HMRC, thanks for all the help received.

Regards,

Leither.