Trust with registered charity beneficiaries

Client wants to set up a Discretionary Trust with 10 registered charities as beneficiaries. I had always assumed the Trust is just set up in the usual way, registered with HMRC and that was it. But client has been advised that it needs to be registered with the Charity Commission. I didn’t think this was necessary as the beneficiaries are registered charities themselves.

Can anyone confirm?

Thank you

By registering as a charity with the Charity Commission (if they will let you, as they are becoming increasingly reluctant to register these “vanity” charities) the trust will not have to pay tax on its income or gains and the client may claim gift-aid on any donations s/he makes to fund the trust (subject to meeting the normal gift-aid requirements personally) which the charity can also reclaim to supplement its charitable grants.

Thank you, but it sounds like you’re saying this isn’t a requirement - just that there are benefits of doing so.

The alternative if they don’t (or like you say can’t) register with the CC is that the trust pays the tax and then the charity claims that tax back on any distribution they receive.

A charity can get all the tax benefits just by registering with HMRC as a charity.

However, s.30 Charities Act 2011 requires that any organisation with exclusively charitable objects and income over £5,000 must register with the Charity Commission (absent exemption or a few categories that don’t apply here).

Given an English organisation is a “charity” if “it is established for charitable purposes only” (s.1 CA), I imagine this trust must be a charity unless there is power to benefit others (say a power to add other beneficiaries) and therefore will need to register if its annual income exceeds £5k.

This is exactly what I was looking for Andrew, thank you.