Just 153,241 Trusts are registered with HMRC, according to FoI request

It has been revealed that HMRC is only aware of 153, 241 trust funds in the UK, despite estimates that as many as one million have been set up.

Since June 2017, all trusts must be registered with HMRC. The current deadline is September 2022, with fines for those that miss it. Exactly what the penalties are is still being established, but it’s expected to be either 5% of tax liabilities held by the trust, or £300 - whichever is more.

The data, which was revealed by Canada Life from a Freedom of Information Act, did highlight a massive spike in registrations in 2018 ahead of the initial deadline. Registrations are already rising as September draws nearer.

Speaking on the findings, Stacey Love, tax and estate planning specialist at Canada Life said:

“We’ve had a strong start to the year for successful registrations but given recent estimates that one million registrations may need to be completed, I suspect HMRC will experience a flood of registrations over the coming months. This means that almost 170,000 trusts would need to be registered each month to meet the deadline.

“It is to be hoped that HMRC has used its past experience of the spike in registrations in Q1 of 2018 to ensure the current system is ready for the expected surge, but it’s important that advisers encourage their trustee clients who may be impacted to register well ahead of the deadline.”

What is a trust?

A trust is a legal arrangement in which a party, known as the trustor passes over control of their assets to a trustee, who manages them on behalf of a beneficiary or beneficiaries. There are numerous different types of trusts, with each one being taxed differently.

As well as physical assets and cash, agreements like life insurance can be placed in a trust. This can speed up the claim process and exempt the payout from inheritance taxes.

If you're planning on setting up a trust, and are interested to see what kind of life insurance policies are available to you, then you use our comparison tool to find out.