A trust-related problem has emerged when two brothers (whoʼre now trustees) found out their parents holiday-home trust isnt properly registered. The property — worth about £450k — has been sitting in an un-registered trust since early 2010s
The rules for trust registration have changed big-time: now you need to tell HMRC about almost every trust within 90 days of creation (even if it dont make any money). If you dont do this theres a possible £5k fine hanging over your head; however tax folks are being pretty nice about it right now since its a new-ish rule
Hereʼs what the brothers missed:
* Trust registration with HMRC
* Ten-year anniversary tax payment
* Regular updates to authorities
The real head-ache is that missed ten-year payment — its calculated like this: take the propertys value subtract £325k then apply up to 6% tax on whats left. For a £450k house that could mean around £7.5k in charges (plus some extra costs for being late)
The good news is HMRC is often understanding with first-time trustees — especially when thereʼs been a change-over due to parents passing away. The smart move would be to:
* Register the trust quick-smart
* Work out the tax based on 2021s property value
* Talk to HMRC about the late payment
The next big date to watch is gonna be somewhere in early-2030s when another ten-year charge comes due. Its super-important to mark that one down and not miss it like last time
Its a bit like going up to the sales counter at Waterstones and telling them about the books you have just borrowed from the library