IEIM400700 - Custodial Institution: Trusts

Trusts

Trusts are treated as entities by all of the agreements for automatic exchange of information.

A trust can be either a financial institution or a Non-Financial Entity. Where a trust meets one of the definitions for being a Financial Institution [see IEIM400600] it is most likely to be an Investment Entity [see IEIM400760] but it may, alternatively, meet the requirements for being a Custodial Institution [see IEIM400640].

For example, shares held in trust may be in a Custodial Account [see IEIM402200] and therefore subject to reporting by the trust as the Custodial Institution that holds the account. This may be the case where a trust such as an Employee Benefit Trust continues to hold financial assets, such as shares, for an employee after they have been granted.

Where an Employee Benefit Trust holds shares for the future benefit of employees, but the shares are not allocated, then under most circumstances this right to a future allocation would not fall to be a custodial account. Similarly, when shares are allocated and the trustee is directed to transfer the assets as soon as reasonably possible to the beneficiary, a broker, a custodian, etc., then the trust will not be treated as maintaining a financial account for the duration of time it takes to complete the transfer.

Further guidance on trusts can be found at http://www.hmrc.gov.uk/manuals/ihtmanual/ihtm42900.htm.