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New trust registration rules – the deadline is approaching

Published: 28 June 2022

Many people have created Trusts, often for wealth protection or Inheritance Tax planning reasons.  The law has recently changed and you need to consider whether you now have to register your Trust with HMRC.  For most trusts needing to be registered for the first time, the deadline to register them is now only three months away on the 1st September 2022.  The aim of this article (limited to the rules relating to UK Trusts) is to help you understand how the new rules may affect you.

Background

Since 2017, most taxable Trusts have been required to register with HMRC's Trusts Registration Service (TRS).  The TRS was introduced following the Fourth EU Anti-Money Laundering Directive which sought to establish greater transparency around Trusts and the persons connected with them.  The TRS requires the Trustees to provide information to HMRC about themselves, the person who created the Trust (the Settlor), the beneficiaries, and the Trust's assets.

The UK's implementation of the Fifth EU Anti-Money Laundering Directive in October 2020 extended the scope of the requirement to register to all 'express' Trusts, save for some specific exclusions, and even if the Trust is not taxable. 

HMRC can allow access to the information registered on the TRS to an individual or organisation demonstrating a legitimate interest, such as where the information is needed by law enforcement agencies in relation to a money laundering investigation.

The Trustees are required to keep the information provided to the TRS up to date and to maintain their own records of important information relating to the Trust and its beneficiaries.

Which Trusts are affected?

All UK resident express Trusts (unless specifically excluded).  An 'express Trust' is one which is deliberately created by the Settlor, perhaps by Deed, Settlement or Declaration of Trust, as opposed to those Trusts which are created through operation of the law or a court order.  Trusts in the Will of someone who has not died are not 'express Trusts'.

A UK-resident Trust is a Trust where all of the Trustees are UK resident, or there is a mix of UK resident and non-UK resident Trustees, and the Settlor of the Trust was either UK resident or UK domiciled when the Trust was created or when further funds are added.

For the avoidance of doubt, non-express Trusts and excluded express Trusts will have to register with TRS if they have a tax liability.

Which Trusts are excluded?

This is not a comprehensive list, but includes the following types of Trusts, unless they become taxable:-

  • Pilot Trusts set up before the 6th October 2020 holding no more than £100.
  • Trusts holding assets for a disabled person.
  • Personal Injury Trusts.
  • Will Trusts during the two years after the date of death unless property from outside the estate is added to them in the meantime.
  • Declarations of Trust of property where the legal and beneficial owners are the same persons.
  • Bereaved Minors Trusts and 18-25 Trusts.
  • Trusts arising on an intestacy.
  • Trusts set up by a Court order.
  • UK registered pension scheme trusts.
  • Charitable Trusts.
  • Trusts used to open a bank account for a child.

What information is needed to register the Trust?

HMRC requires full details of the Settlor (the person or persons who set up the Trust), the Trustees, the Beneficiaries and, in some cases, the Trust's assets.

What are the deadlines?

Taxable Trusts need to be registered by the 31st January after the end of the tax year in which the Trustees have to pay tax.

Non-Taxable Trusts in existence on or before the 6th October 2020 must be registered by the 1st September 2022.

Non-Taxable Trusts created on or after the 6th October 2020 must register within 90 days of being created (or otherwise becoming registrable) or the 1st September 2022, whichever is the later date.

In addition, the Trust Register must be updated within 90 days of any changes to the trust details or beneficial ownership.

HMRC will impose penalties for failure to comply.

How we can help

Our Wills and Probate Team includes Trust specialists who can help you to determine if your trust needs to be registered, and our Trust Registration Questionnaire is designed to gather together quickly and easily all of the information needed to register the trust with HMRC.  We are registered as a professional agent with HMRC for Trust Registrations and have full access to the Trusts Registration Service online registration portal.

Our fixed fee for registering a trust is £375 plus VAT.  If it is necessary to complete a detailed initial assessment of the trust to determine whether it needs to be registered, then our fixed fee for this initial assessment is £250 plus VAT.

For more information, please email enquiries@AandCo.co.uk or contact Tim Dysterre-Clark or Sarah Nash directly. 

 

The information contained within this article is provided for information purposes only and does not constitute legal advice.  Specialist legal advice should be taken in relation to specific circumstances.