HMRC SDLT: SDLTM31745 – Application – Trusts and powers: Changes in the composition of trustees of a continuing settlement

Principles and Concepts of Trustee Composition Changes

This section of the HMRC internal manual discusses the application of rules regarding changes in the composition of trustees within a continuing settlement. It outlines the principles and concepts involved in such changes.

• Explains the legal framework governing trustee changes.
• Details the responsibilities and powers of new trustees.
• Describes the impact of trustee changes on the settlement.
• Provides guidance on procedural requirements for trustee changes.

SDLTM31745 – Application – Trusts and Powers: Changes in the Composition of Trustees of a Continuing Settlement

Understanding SDLT and Trustees

When dealing with Stamp Duty Land Tax (SDLT), it is important to understand how trustees of a settlement are classified. Specifically, when we refer to trustees in this context, we treat them as one unified group or body of individuals. This understanding is consistent with the way we approach capital gains tax as well.

Key Points About Trustee Changes

One significant aspect to note is that if there is a change in who the trustees are in a continuing settlement, this does not qualify as a land transaction for SDLT purposes. Below are the key implications of this principle:

– No Land Transaction: The change in trustees does not count as a land transaction, meaning it does not trigger SDLT.

– No SDLT Charge: There is no tax charge associated with events where trust property is mortgaged or used as security for borrowing.

Filing Requirements

Because a change in trustees does not count as a land transaction, you do not need to complete a land transaction return. This simplifies the process for both the trustees and any involved parties.

Land Registry Applications

If a change in trustees leads to a requirement to make an application to the Land Registry, specific steps need to be followed:

– Covering Letter: A letter should be included with the application to explain the change in trustees. This letter is important unless the documents being submitted make it clear that they are related to the change in trustees.

– Clarity in Documents: If the documents submitted to the Land Registry clearly show that they relate to a change in trustees, a separate letter may not be necessary.

Examples to Illustrate the Concept

To better understand these principles, let’s consider a practical example:

– Suppose a trust is set up to manage a property, and the original trustees decide to retire. They appoint new trustees to take over. Since the original trustees are part of a single body, changing who these individuals are does not create a separate transaction related to the property. Hence, the trust maintains its status, and there is no additional SDLT to pay.

– In another scenario, say a trustee needs to secure a loan using the trust property. If a new trustee is appointed during this process, this change does not affect the SDLT obligations. The loan itself may have its own implications, but the change of trustees remains free from SDLT charges.

Conclusion and Next Steps

While there may be no additional SDLT obligations when changing trustees, it remains essential to remain compliant with the requirements surrounding land registry applications and to ensure any required documentation is properly managed. Keeping these points in mind will help ensure smooth handling of trustee changes within any continuing settlement framework.

If you need further information, please refer to the relevant sections of the SDLT guidelines, or consult a legal expert knowledgeable in trust and tax laws.

Useful article? You may find it helpful to read the original guidance here: HMRC SDLT: SDLTM31745 – Application – Trusts and powers: Changes in the composition of trustees of a continuing settlement

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