In most cases, Discounted Gift Trusts now need to be registered with HMRC. This rule came in as part of anti-money laundering legislation and applies to most UK trusts, even if there’s no income or tax due.
In the following sections of this article, we confirm when and where Discounted Gift Trusts have to be registered with HMRC.
If you’re currently researching DGTs, our guide to the pros and cons of using Discounted Gift Trusts will provide you with detailed insights on this topic.
Does every type of DGT need to be registered with HMRC?
Generally, registration is needed. Not all DGTs are automatically required to be registered. For example, if they qualify due to having no tax consequences, they may fall under exemption rules.
However, most modern DGTs involve investment bonds and discretionary trust structures, so registration is usually required.
If you’re weighing up whether this type of trust is right for you , our guide on using Discounted Gift Trusts to mitigate inheritance tax explores how they work and who they suit. We also cover why they’re an option for reducing your estate’s taxable value while retaining a regular income.
Registering a Discounted Gift Trust with HMRC
Registration is done through the Trust Registration Service (TRS). You’ll need to register the trust within 90 days of its creation. HMRC can apply penalties if this is missed.
Key registration requirements for DGTs
Here is a short list of the main requirements when registering these types of trusts with HMRC:
- Registration timeframe: New trusts must be registered with HMRC within 90 days of being created.
- Existing trusts: Trusts in existence on or after 6 October 2020 must be registered, even if no tax is currently due.
- Ongoing updates: Trustees are required to update the Trust Registration Service within 90 days of any changes, including changes to trustees, beneficiaries, or trust details.
- Penalties for non-compliance: Failure to register a trust or keep the information up to date may result in penalties from HMRC.
Discounted Gift Trusts are classed as express trusts and must comply with these registration and ongoing reporting requirements under HMRC rules.
Who is legally responsible?
The trustees are legally responsible for registering, though many providers or advisers will help. You’ll need to provide details of the settlor, trustees, beneficiaries, and assets held in the trust.
HMRCs rules & regulations
Even though a DGT is set up for inheritance tax planning, not income generation, it still counts as a registrable trust under HMRC rules. Once registered, you’ll need to keep the information up to date. That means reporting any changes in trustees or beneficiaries within 90 days.
Don’t assume someone else is doing it. Always confirm who’s responsible during the trust setup.
To learn more, the section about registering trusts on HMRC’s website.
Summary: Do you need to register Discounted Gift Trusts with HMRC?
To conclude this article on whether you need to register Discounted Gift Trust with HMRC, here’s a quick summary of the key points covered:
- Most DGTs must be registered with HMRC through the Trust Registration Service.
- Some may be exempt if they are structured as bare trusts with no tax liability.
- Registration must be completed within 90 days of creating the trust
- Trustees are responsible for registering and keeping the trust updated.
- Any changes to trustees or beneficiaries must be reported within 90 days.
Now you know you must register a DGT with HMRC, to learn more about trusts and inheritance tax, read the articles below.
Related reading:
FAQs
In most cases, you will need to register your Discounted Gift Trust with HMRC. Unless the trust meets a specific exemption, registration with HMRC is required under current anti-money laundering rules. Seek the advice of an estate planner or IHT adviser to gain complete clarity
How do I register the DGT with HMRC?
You register your DGT using HMRC’s Trust Registration Service. Some advisers handle this directly. If not, they should guide you through the process and deadlines. To help you find the right inheritance tax planning specialist, keep a note of these questions, and gauge their responses.
What happens if I don’t register it?
HMRC may issue penalties if you don’t register the Discounted Gift Trust. And, it’s important to note, the trust must usually be registered within 90 days. Missing that window can create problems for trustees and beneficiaries and impact the effectiveness of your estate planning.
What information do I need to give HMRC?
There is a range of information you need to submit to register a DGT with HMRC. You must provide the full names, dates of birth, addresses, and roles of the settlor, all trustees, and beneficiaries, along with details and value of the trust assets. HMRC may also request National Insurance numbers or ID documents.
Do I need to update HMRC if something changes with the trust?
Yes. If a trustee steps down, someone moves, or a beneficiary changes, HMRC must be told. You have 90 days from the date of change, and updates must be made online. This information is important, so make a note.