The UK Trust Registration System

Two of the primary advantages of trusts lie in their high level of secrecy and tax avoidance potential. The secrecy stems from the fact that trust deeds do not need to be disclosed to the public. A settlor can simply create a private trust deed, often without even involving a trust company, and successfully establish a highly confidential trust. This secrecy remains intact unless the law mandates disclosure of the trust arrangement (e.g., trusts holding shares in publicly listed companies). The tax avoidance aspect also derives from this secrecy: since tax authorities are often unaware of the actual beneficiaries behind a trust, they may be unable to accurately assess and tax the individuals involved.

To address the issue of high-net-worth individuals using trusts to conceal assets and evade taxes, an increasing number of countries have introduced trust registration systems. These systems require trusts meeting specific conditions to register with the authorities or face legal consequences. This article explores the UK Trust Registration System.