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Making sense of the Trustee Act 2000


While it might seem pretty obvious that trustees must look after the best interests of those who benefit from the trust, their obligation to do so is so important that the Trustee Act 2000 makes it a statutory duty of care.

The Act, which came into force in 2001 and applies in England and Wales, was designed to modernise the way that trustees oversee the management of investments held in trust and to give them a more general power of investment.

In effect, this means that trustees can make use of a wider range of investments than they were able to before the Act, including collective investments such as unit trust and investment bonds.

As well as the duty of care requiring the trustee to exercise “such care and skill as is reasonable in the circumstances” in everything they do in relation to the trust, there are specific responsibilities regarding what is known as the standard investment criteria.

This means that the trustee must make sure that any investment proposed or retained by the trust is suitable for it and must also consider the need to diversify investments, where appropriate.

Keith Lyons, a director of LRH Wealth Management Limited, says: “Many trustees are professionals, who are used to dealing with trust matters but for those who are not au fait with the issues and for non-professional trustees, meeting the obligations of the Act may seem daunting.

“In these circumstances, it’s wise to seek the advice of professionals in the field to ensure compliance with the Trustee Act 2000 and peace of mind for the trustee.”

LRH Wealth Management have a Trust Compliance flowchart available to assist trustees in identifying their resposibilities. Please complete the below form to download a copy of the checklist or for more information, please contact us.

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Latest News

Is 2025 your year to incorporate? Here are our top tips

January 16th, 2025

Nearly 900,000 companies were incorporated in 2024 – an 11.2 per cent increase compared to 2023. More entrepreneurs are recognising the benefits of limited companies.

The advantages of limited companies include limited personal liability, mitigated taxation and greater exposure to investment opportunities.

To help you start your journey towards limited company status, here are our top tips:

Research

Taking the first steps towards incorporation should not be taken lightly. Whilst it limits liability if things go wrong, it does come with some strict compliance requirements in regard to regular reporting to Companies House, which you need to prepare for.

Paying yourself

As a director, you can pay yourself via salary, dividends, or both to maximise your take-home pay.

The most efficient approach is often to pay yourself a lower salary, so you are not liable for Income Tax or National Insurance Contributions (NICs), but still contribute enough towards your state pension, and take the rest as dividends, which is subject to a lower tax rate.

Be aware that it may not always be possible to pay a dividend if your profits aren’t sufficient.

Structuring your company

When considering the distribution and management of share rights in a limited company, several key aspects must be carefully planned and managed. You will need to define how dividends are paid, voting rights and share structure.

At this stage, you may also need to discuss a future exit, including transfer, drag-along and tag-along rights.

As part of this process, you will need to address how the shares and shareholder rights align with the company’s Articles of Association.

Open a business bank account

Open a separate bank account for your business as soon as possible. Some founders make the mistake of thinking they can mix personal and business finances at the beginning, but it makes applying for reliefs and paying taxes more complicated as you have to declare what each transaction is for and when it was made.

Treat your business like a separate entity (because it is)

If you plan to inject personal funds into your company or take money out, do it properly through a Director’s Loan Account.

Make sure to detail each transaction going in and out of the business and never take out excessive amounts of money, as this can attract attention from HM Revenue & Customs (HMRC) and lead to fines.

If you are considering incorporation, you should seek professional advice and ongoing support to reduce the potential for errors and non-compliance with Companies House regulations.

Ready to take the next step? Contact us today for expert advice on incorporating your business.

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