According to statistics released by HM Revenue and Customs (HMRC), the number of families using trust funds has dropped by 6 per cent in last year.

Trusts and estates UK statistics 2017/2018

Official data just released by HMRC shows that the number of trusts and estates in the UK has fallen for a fourth consecutive year.

In 2017/18, there were 149,000 trusts which submitted a tax return, down 6 per cent from 159,000 in 2016/17. This is consistent with the decline from 2005/06, when there were 220,500 trusts and estates in the UK, to 2013/14, when the number was down to 171,500.

The latest HMRC trusts and estates data showed:

• there were 149,000 trusts which submitted a tax return in 2017/18, down 6 per cent from 159,000 in 2016/17
• this represents a 29 per cent drop in the past 12 years
• trusts and estates had a total income of £2.73bn, an increase of 12 per cent from the previous year
• the total tax bill for trusts and estates was £1.32bn, an increase of 5 percent from the previous year

What is a trust fund and why are they used for wills?

A trust is a legal vehicle used to pass assets to a trustee, who in turn holds these assets in a ‘trust fund’ for a third party, such as the beneficiary. There are many reasons why a person making a will (the testator) may wish to incorporate a trust. These include:

• to protect young or other vulnerable beneficiaries
• to ensure that assets are safeguarded within the family
• to maximise tax reliefs, namely inheritance tax

What are less people using trusts?

The advantages of trusts have slowly been decreasing for the past decade. In 2006, the UK government announced reforms which meant many assets moved into trusts became subject to a 20 per cent inheritance tax levy. Not only that, in 2016, the government increased the income tax rate for dividends held in trusts and removed a ten per cent dividend tax credit.

Trusts have also suffered from a reputational perspective in recent years, with some of the public inherently associating them with tax avoidance. This, along with the introduction of an online register of trusts in 2017, has made some families more reluctant to use trusts due to concerns over privacy.

See also

Property protection and other will trusts

Can someone with dementia make a will?

Find out more

Trusts and taxes (Gov)

Trusts and Inheritance Tax (Gov)

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