Trusts let wealthy individuals benefit from assets they don’t technically own—and often don’t have to disclose. This secrecy distorts official measures of inequality, hides the true scale of tax avoidance, and lets people sidestep legal restrictions like sanctions or divorce settlements. Yet trusts also serve legitimate purposes, such as managing money for minors or people unable to handle their own finances. The problem is a near-total lack of hard data. Policymakers currently rely on anecdotes and lobbying from interested parties, making it impossible to model the revenue or distributional effects of reform. This inertia blocks change even when the status quo clearly fails. This project will build the first comprehensive quantitative evidence base on trust use. It will combine new administrative data, leaked bank records, web-scraped materials, surveys, and interviews to answer four questions: who uses trusts, how they exploit them for tax and secrecy, what benefits users see, and how regulation should change. If successful, the research could give policymakers the tools to design reforms that curb abuse without destroying trusts’ legitimate functions—potentially shifting billions in hidden wealth onto tax rolls and improving how inequality is measured.
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Trusts are a key tool in wealth management and tax planning. They allow individuals to benefit from wealth without controlling, or often even disclosing, those assets. Trusts can inhibit our understanding of the world by distorting our picture of inequality, and concealing the extent of tax avoidance and evasion. Trusts can also constrain the types of tax policies that are (seen as) possible, and allow the wealthy to evade legal restrictions such as sanctions and divorce rulings. However, they also offer flexibility of ownership, including for minors or other individuals who are unable to manage finances for themselves, which can have societal benefits. Together, this makes it essential to better understand how and why trusts are used in response to tax and regulatory policies, and how reforms could limit the negative implications while retaining the valuable aspects they provide. A major barrier to reform is the lack of quantitative evidence on the scale, use and policy implications of trusts. Policy in this area is therefore excessively reliant on individual anecdotes and consultation responses by interested parties. The lack of robust quantitative evidence makes it impossible for policymakers to reliably model the revenue, distributional and other economic impacts of reforms, creating a powerful force of inertia, limiting change even when there are examples that the status quo is not working. This project will therefore create new evidence on the role of trusts, and other 'split ownership' structures, in the management and preservation of wealth by the wealthy, and develop policy options for reform. The research will address four key questions: (1) Who uses trusts for wealth planning, and how does this affect measurement of inequality? (2) How, and to what extent, are trusts used for tax, secrecy and regulatory avoidance? (3) What are the benefits of trusts, according to their users and providers? (4) How should the taxation and regulation of trusts be reformed? It will do this using a mixture of quantitative data from new administrative sources, recent bank leaks, our own 'scraping' of websites and other textual materials, and primary surveys (quantitative) and interviews (qualitative), to provide a comprehensive insight into how trusts are used. By triangulating across such a wide array of data sources, the project can tackle the full range of questions relating to trusts, using the most appropriate data for each question. Approaches to tackling these questions will be borrowed from a range of academic disciplines, providing a rounded picture of trust users and trust use. This will make the evidence even more valuable in considering the implications of potential policy reforms.
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