HMRC disclosure requirements © Aviva PLC Private and confidential

By the end of the session you will be able to:- Learning outcomes By the end of the session you will be able to:- Describe the disclosure requirements of trustees under the EU’s fourth anti- money laundering directive Inform trustees and or personal representatives of their obligations on the new online submission service Describe the advantages of using online trusts

Divider heading option 4 The European Parliament's committee of inquiry into the Mossack Fonseca affair has demanded a fully public beneficial ownership register for trusts © Aviva PLC Private and confidential

Have you… Set up trusts? Advised settlors? Advised trustees? Advised executors? © Aviva PLC Private and confidential

Which trusts need to register? Online trust register Trusts Registration Service (TRS) Which trusts need to register?

Which assets trigger the need to register? Online trust register Trusts Registration Service (TRS) Which assets trigger the need to register?

Which trusts? On trustees of UK trusts and non-UK trusts which receive income from a UK source OR have assets in the UK on which a UK tax liability arises (defined as "relevant trusts")

Online trust register Trusts Registration Service (TRS) …there will be no penalty imposed where registration is completed after 5th October 2017 but before 5th December 2017

Beneficial owners Include:- Settlor Trustees Beneficiaries Class of beneficiary Controller of trust Executors Administrators

the trustees are obliged to notify you within 14 days Beneficial owners If any information about the beneficial owners changes during the course of the relationship… the trustees are obliged to notify you within 14 days © Aviva PLC Private and confidential

‘such as a letter of wishes’ Beneficiaries The regulations apply to trustees and require them to maintain accurate and up-to-date records in writing of ‘potential beneficiaries’. ‘such as a letter of wishes’

…in relation to each of the beneficiaries:- their full name and national insurance number or unique taxpayer reference.

If they have neither, their usual residential address Beneficiaries If they have neither, their usual residential address And if that address is not in the UK, details from passport or ID card

In turn, HMRC is obliged to maintain its own register Online trust register Trusts Registration Service (TRS) In turn, HMRC is obliged to maintain its own register and to allow it to be inspected by certain, named law enforcement agencies © Aviva PLC Private and confidential

Is now a time to review existing interest in possession trusts? To minimise the compliance burden on both trustees and their advisers… …the emphasis may increasingly lie on creating or, where possible, amending trusts to include a description of the class of beneficiaries Trust amendments? © Aviva PLC Private and confidential

Trust amendments Is moving from pre 2006 PET regime into chargeable lifetime regime a good tax outcome?

Remember it’s the assets which trigger the need to register! Trusts amendments Remember it’s the assets which trigger the need to register! © Aviva PLC Private and confidential

Residence Nil- Rate Band downsizing © Aviva PLC Private and confidential

Residence nil rate band Individual dies on or after 6 April 2017 Individual owns a home, or a share of one, so that it’s included in their estate Individual’s direct descendants such as children or grandchildren inherit the home, or a share of it Value of the estate isn’t more than £2 million An estate will also be entitled to the RNRB when an individual has downsized to a less valuable home or sold or given away their home after 7 July 2015

Residence nil rate band Case Study Write down the relevant facts you need to calculate downsizing to protect the RNRB © Aviva PLC Private and confidential

Residence nil rate band Mrs K, a widow, sold a home worth £195,000 in June 2018. The maximum RNRB when the home was sold in the tax year 2018 to 2019 is £125,000. She dies in August 2020 with no home in her estate. The maximum RNRB when Mrs K dies in tax year 2020 to 2021 is £175,000. Mrs K’s estate is also entitled to transferred RNRB of £175,000. © Aviva PLC Private and confidential

Residence nil rate band Mrs K, a widow, sold a home worth £195,000 in June 2018. The maximum RNRB when the home was sold in the tax year 2018 to 2019 is £125,000. She dies in August 2020 with no home in her estate. The maximum RNRB when Mrs K dies in tax year 2020 to 2021 is £175,000. Mrs K’s estate is also entitled to transferred RNRB of £175,000. © Aviva PLC Private and confidential

Residence nil rate band Step 1 Step 2 Step 3 Step 4 Step 5 © Aviva PLC Private and confidential

Residence nil rate band Step 1 © Aviva PLC Private and confidential

Residence nil rate band Step 1 June 2018 Sold £195,000 2018 RNRB - £125,000 Transferrable RNRB - £175,000 Total - £300,000 © Aviva PLC Private and confidential

Residence nil rate band Step 2 © Aviva PLC Private and confidential

Residence nil rate band Step 2 Work out protected RNRB £𝟏𝟗𝟓,𝟎𝟎𝟎 £𝟑𝟎𝟎,𝟎𝟎𝟎 =𝟔𝟓% © Aviva PLC Private and confidential

Residence nil rate band Step 3 © Aviva PLC Private and confidential

Residence nil rate band Step 3 Step 3 Property in estate utilising RNRB: No home in the estate at the date of death, so the percentage is 0% © Aviva PLC Private and confidential

Residence nil rate band Step 4 © Aviva PLC Private and confidential

Residence nil rate band Step 4 Existing property reducer 𝟔𝟓% −𝟎%=𝟔𝟓% © Aviva PLC Private and confidential

Residence nil rate band Step 5 © Aviva PLC Private and confidential

Residence nil rate band Step 5 Estate’s “protected” RNRB £𝟏𝟕𝟓,𝟎𝟎𝟎+£𝟏𝟕𝟓,𝟎𝟎𝟎 𝒙 𝟔𝟓% =£𝟐𝟐𝟕,𝟓𝟎𝟎 © Aviva PLC Private and confidential

Residence nil rate band Does not apply when :- No direct descendants Estate worth more than £2.5m

HMRC Estates Online Service Complex Estates

HMRC Estates Online Service For personal representatives and their agents to register complex estates and update their records online, replacing the current paper process

HMRC Estates Online Service Value of the estate exceeds £2.5M, OR Tax due for whole of the administration period exceeds £10,000, OR Value of assets sold in any tax year for date of deaths up to April 2016 exceeds £250,000, OR £500,000 for date of deaths after April 2016

IHT online © Aviva PLC Private and confidential

IHT online Who can use IHT Online? Personal applicants (not agents currently) are eligible if: As personal representative (eg executor) of person who died Applying for grant of representation (eg probate) in England or Wales And no IHT payable © Aviva PLC Private and confidential

Summary -What the changes mean HMRC Trusts Registration Service (TRS) The following must be registered (normally by 5th October* of year after liability to income or Capital Gains tax first arises, thereafter by 31 January) Existing trusts with a UK tax consequence *extended to 5th December in 2017 as first year

Summary -What the changes mean HMRC Estates Online Service The following must be registered:- Complex Estates i.e. value over £2.5 Million Or where tax due for administration period exceeds £10,000 Or assets sold in tax year exceed £250,000 for deaths before April 2016/ £500,000 after

Ability to place each policy under its own trust. Aviva support Ability to place each policy under its own trust.

Pension Portfolio Trust Using a pension trust is not about tax planning. It is about control for clients – Appointing their own trustees to choose who will receive benefits rather than the Aviva Pension Scheme Trustees Controlling not only the initial beneficiaries, but also successive beneficiaries It is an integrated trust, which means that any remaining funds on the death of the member will definitely be paid to the trust Aviva support Pension Portfolio Trust

By the end of the session you will be able to:- Learning outcomes By the end of the session you will be able to:- Describe the disclosure requirements of trustees under the EU’s fourth anti- money laundering directive Inform trustees and or personal representatives of their obligations on the new online submission service Describe the advantages of using online trusts

Important notes Information based in this presentation is based on current tax rules, which can change. Tax treatment is depends on individual circumstances http://www.aviva-for- advisers.co.uk/adviser/site/public/building-your- business/save-smarter/tax-year-end-2017

Thank you

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