22/08/2022
The Trust Registration Service (TRS) was introduced by HMRC in June 2017, as part of an Anti-Money Laundering Direction aimed at improving transparency around the beneficial ownership of assets held in trusts. When this was first set up, only certain trusts were liable to pay taxes such as Inheritance Tax, Capital Gains Tax, and Income Tax were obligated to register.
However, following new rules introduced on 6 October, it is now a requirement for any trust, bar some specific exclusions from the HMRC, both UK and non-UK, to be registered with the TRS (part of the government website), regardless of whether the trust is liable to pay any tax or not.
The deadline for non-taxable trusts created on or before 6 October 2020 to be registered is before 1 September 2022.
Failure to register an appropriate trust by the September 2022 deadline could result in harsh financial penalties from the HMRC.
What needs to be registered?
Full information, including guidance on how to check if the new registration rules affect you, can be found on the HMRC’s website here. Below is an overview of the types of trusts the HMRC have said the registration rules apply to:
- All UK express trusts, regardless of whether they have a UK tax liability;
- Some non-UK express trusts, such as those who have no UK trustees but own land or property within the UK and trusts with at least one UK trustee which acquires UK property or enters into a business relationship with a relevant person in the UK, for example, a financial advisor;
- Non-express trusts and excluded express trusts where they have a tax liability. These must be registered to receive their Self-Assessment (SA) Unique Taxpayer Reference (UTR) which is required to submit SA tax returns.
What happens if you create a trust after September 2022?
The changes to the rules also affect the deadline for registration of trusts set up after 1 September and the deadline for reporting changes of registered information. After the 1 September a newly set up trust falling within the scope must be registered within 90 days of its creation. Trustees will be obligated to ensure that a trust is registered within the timeframes, and HMRC will enforce penalties for any trusts that are not registered within the deadline. Additionally, there is a requirement to record any changes, such as the trust details or changes in circumstances after the trust registration, with the trust register, and these must be recorded within 90 days of the change.
What Trusts are excluded from the new rules?
HMRC has confirmed that some trusts will be excluded and, therefore, will not need to be registered. Some of those trusts (unless they have a UK tax liability) include, but are not limited to:
- Charitable trusts that are UK regulated
- Pension trusts that are already registered with HMRC as a pension scheme
- Co-ownership trusts set up to hold shares of property or other assets which are jointly owned by 2 or more people for themselves as ‘tenants in common’
- Trusts for bereaved children under 18, or adults aged 18 to 25, set up under the will (or intestacy) of a deceased parent or the Criminal Injuries Compensation Scheme;
Specialist Wills and Trusts Solicitors
If you are unsure about the new rules and want an existing Will or Trust reviewed, our specialist Wills and Estates lawyers can help. We can help confirm the type of trust you may have and your obligations. If you are considering setting up a trust, we can advise you on what form of trust, if any, is suitable for your needs. Whatever your requirements, we are here to help.
At Russell & Russell Solicitors, our specialist private client team can advise on all matters concerning Trust, Wills, Living Wills, Lasting Powers of Attorney and Probate.
Free 30-minute consultation
If you would like to get in touch to arrange a free 30-minute initial consultation with our Wills team, please call 0800 103 2600 or request a call back.
Please note that this article is meant as general guidance and not intended as legal or professional advice. Updates to the law may have changed since this article was published.