Hello
I’ve just created a discretionary trust with property consisting of several investment bonds. These do not create income and tax is only payable on withdrawal which won’t be for several years. Also as the gifts ( and other CLT) are well below the NRB limit, and the Settlors are alive, I assume an IHT100 does not need to be submitted. The Gov docs regarding need to register have confused me!
For example: The following types of trusts must register even if they have no tax liability: all UK express trusts — unless they are specifically excluded
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:
Further considerations for trusts that are only required to register because of a liability to UK tax 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
Does the need to register a discretionary trust (by virtue of being an express trust) trump every other consideration as mentioned above???
A gift to a discretionary trust will require a form IHT100 and a form IHT 100a unless the transfer is fully exempt. Details are in form IHT 110 mainly at p31 onwards
A condition of the Regs is that the transfer be of cash or quoted shares or securities. The exception will not be available if bonds were transferred in as opposed to cash being transferred in first and then used to buy them. “…created a discretionary trust with property consisting of several investment bonds” could perhaps describe either of these sequences.
Correction! The cash/quoteds is only one alternative condition. The other condition that can be fulfilled is as Andrew states but there is a connection with the transferor’s historical cumulation; that and the value of the current transfer must together be within the limit he quotes