Premium Bonds for a child and HMRC Trust reporting

[yorkshirelad1]

(I started this thought process in another thread viewtopic.php?f=49&t=35591&p=523041#p523041, but am creating a new thread for this in its own right)

It is possible to buy Premium Bonds for a child under 16
https://www.nsandi.com/products/premium-bonds
From the brochure (https://www.nsandi.com/files/asset/pdf/ ... ochure.pdf) “Children under 16 can hold Premium Bonds. However, the Bonds will need to be looked after by the child’s parent or guardian”.

Having just done HMRC's Trust reporting (https://www.gov.uk/guidance/register-a- ... -a-trustee) for a couple of my life insurance policies which are in trust, and reading threads on here, got me thinking about Premium Bonds for a child under 16 and whether the PBs should be reported under HMRC's Trust reporting. It seems a bit of a minefield and there is no clear answer (like much of the TRS), so I'm posting here for anyone else's thoughts and comments while I go and do some thinking and some further research.

Preliminary bits of information:

https://www.tax.org.uk/how-grandparents ... -oligarchs:
There is a chink of light. In the view of some experts in this area there are good arguments to say that the small bare trusts holding premium bonds and other types of regulated product could fall within an exemption from the Trust Register for legislative trusts. This seems to be the view HMRC have taken on Junior Isas where they have now relented.

https://www.litrg.org.uk/tax-guides/sav ... r-my-trust:
Premium bonds held for children. At the moment it is unclear whether this sort of bare trust arrangement would need to be registered. We will update this guidance if HMRC provide clarity on this point.

[yorkshirelad1]

I spent about an hour on the phone to the HMRC trust helpline listening to hold music, wanting to ask about another matter, and also asked about Premium Bonds held for a child under 16. The person I spoke to would not be drawn on whether a particular item should be reported or not, only referred me to the information at https://www.gov.uk/trusts-taxes/registering-a-trust, which says what should and shouldn't be registered.

There's a fair bit of information on the web about whether or not PBs for children under 16 need to be registered on the TRS, and also that "representations" are being made (e.g. https://www.accountancyage.com/2022/05/ ... re-we-now/ : "Where an investment portfolio or premium bonds are held by an adult on behalf of a minor child, these arrangements remain in scope and any trusts arising will need to be registered – although further representations have been made to HMRC about whether premium bonds could be excluded") but it looks like those grandparents who have bought PB for their grandchildren will have to do the trust registration.

[yorkshirelad1]

Just for the fun of it, I asked NS&I and what they told me is what I already know in that PBs bought for a child are owned by the child but the parent manages them; also Premium Bonds cannot be held in a trust. That would seem to muddy the water further ....

[yorkshirelad1]

Just stumbled across the "Updates" page for HMRC's TRS manual
https://www.gov.uk/hmrc-internal-manual ... al/updates

[yorkshirelad1]

Useful article in today's FT
FT: 20 Aug 2022 “Deadline looms for trustees of non-taxable trusts”
https://www.ft.com/content/07ccd182-452 ... a62aaf10f2
https://www.google.co.uk/search?q=site% ... on-taxable

[yorkshirelad1]

Sunday Times 11 Sept 2022: "HMRC backtracks on fines for trusts"
https://www.lemonfool.co.uk/viewtopic.php?f=49&t=35901

[yorkshirelad1]

I wrote to my MP asking him to ask HMRC for clarification about whether Premium bonds held for a child under 16 should be registered with the TRS (as they might be considered held in a bare trust). I have today had a reply from my MP with a response from HMRC (below) which indicates that Premium Bonds held for a child under 16 do not need to be registered with HMRC Trust registration service. This is no small relief to me.

[yorkshirelad1]

It is good to note that the HMRC TRS website guidance (https://www.gov.uk/hmrc-internal-manual ... /trsm23160) re the TRS reporting for Premium Bonds has been updated and now reads

Premium bonds: Although the exclusion from registration at Sch3A(6A) does not extend to investments such as premium bonds, premium bonds are not registerable on TRS because a premium bond purchased in the name of a minor does not create an express trust. Premium bonds cannot be held jointly or in trust.

It seems like the update was dated 20 Oct 2022: https://www.gov.uk/hmrc-internal-manual ... al/updates