Trusts and Succession (Scotland) Bill: business and regulatory impact assessment

This business and regulatory impact assessment (BRIA) considers the impact of the Trusts and Succession (Scotland) Bill.

Rationale for Government intervention

The package of objectives outlined above can only be achieved through legislation by the Scottish Parliament. Additionally, the proposals in the Bill and Report are very much in line with two of the Scottish Government's National Outcomes,[6] which form part of the Scottish Government's National Performance Framework.[7] They are:

  • "We recognise that a strong, competitive economy is essential to supporting jobs, incomes and our quality of life":[8] As outlined above, the Bill will modernise the law of trusts in Scotland. The benefits of the Bill will be shared throughout Scotland, providing clarity for both traditional family trusts and complex commercial trusts.
  • "Investing in the skills and creativity of our workforce, protecting workers rights and providing decent working conditions is the right thing to do. It also makes our economy more stable, productive and efficient":[9] Implementation of the Bill will secure and develop the already thriving trust industry which exists in Scotland. This is likely to create an increased demand for trust-related professionals.

The trust is extremely important to Scotland. Whilst it is impossible to give a figure for the total number of trusts in Scotland, some figures are available.

Since their introduction in 2011 there has been a gradual increase in the popularity of the SCIO (Scottish Charitable Incorporated Organisation) legal form as against the form of a trust. In 2020 72% of new charities added to the Scottish Charity Register were SCIOs, 12% were companies, 10% unincorporated associations and 4% were trusts.[10]

There are 2,861 charities registered with the Scottish Charity Regulator (OSCR) whose constitutional form is a trust.[11] Of these charitable trusts, around 1,523 have an annual income in the £1 – £24,999 bracket, about 539 in the £25,000 to £99,999 bracket, and about 439 lie in the upper brackets, with a few appearing to have income of over £500,000.[12]

The Trusts Registration Service had 198,000 trusts and estates registered up to 31 March 2022.[13] This includes taxable and non-taxable trusts, unless it is an excluded express trust. Using population estimates, this represents one trust for every approximately 339 inhabitants.[14] On the assumption that the number in Scotland is proportionate and using population estimates for mid-2020,[15] that means there would be approximately 16,123 trusts in Scotland.

The total Income Tax and Capital Gains Tax payable on UK-wide trusts and estates in the tax year ending 2021 was £1,455 million, increasing by around 5% from the previous tax year; the total income and chargeable gains of all trusts and estates in the same tax year was £6,510 million, an increase of around 7% from the previous tax year.[16]

With respect to commercial trusts, it is more useful to concentrate on the assets held in trust rather than the number of trusts, because the amount contained in any one trust can be extremely large. Trusts over receivables, for example, are used in debt factoring or invoice discounting agreements. Receivables are considered to amount to one third of the assets of the average commercial company, and consequently, the potential scope of these trusts is highly significant. Figures suggest that factoring trusts in Scotland may contain assets worth approximately £5.2bn, and that all receivables trusts might contain assets amounting to £15.7bn (extrapolated from a UK figure of £173bn).[17] The investment industry also makes extensive use of trusts. By way of example, in conversations that the SLC conducted in 2011 with Alliance Trust PLC, they indicated that they had assets under management held in trust of about £3-4bn. Although a well-known group, they are by no means the largest investment managers in Scotland, and the total assets held in trust in this area are likely to amount to several hundreds of billions of pounds.

Finally, all clients' money held by solicitors and other professional firms is held in trust, the amounts of which fluctuate but, in any event, remain substantial.

Prior to the publication in 1999 of the Joint Report on Trustees' Powers and Duties (LC No 260; SLC No 172), numerous stakeholders had pressed the case for root and branch reform of the Scots law on trusts. Responses to the subsequent SLC's Discussion Papers and Reports were overwhelmingly in favour of modern legislation and the objectives of the Bill are firmly supported by stakeholders.

Regarding the one substantive provision on the Scots law of intestate succession, this provision implements a longstanding Scottish Government commitment. The substantive provision will amend the order of intestate succession so that it reflects the contemporary perception of a spouse or civil partner as a key member of the deceased's family.



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