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Registration of Trusts

Published: 4 October 2021

CERTAIN NON-TAXABLE TRUSTS MUST NOW REGISTER WITH HMRC

HMRC's online Trusts Registration Service (TRS) has now opened for registration of non-taxable trusts. Prior to this, only trusts subject to a UK tax liability were required to register with the TRS.

From the 1st of September 2021, all UK express trusts (and a greater number of non-UK trusts) must now register with the TRS, even if the trust has no UK tax liability, unless an exclusion applies. The deadline for registration is now the 1st of September 2022 (extended from the original deadline of the 10th of March 2022).

Essentially, registration requires the Trustees of registrable trusts to disclose to HMRC information about themselves, the trust's beneficiaries and the trust's assets. An express trust is one which has been intentionally created by a person, usually in writing.

The following types of trust are excluded from registration unless they incur a UK tax liability:

  • trusts used to hold money or assets of a UK-registered pension scheme, such as an occupational pension scheme.
  • trusts used to hold life or retirement policies providing that the policy only pays out on death, terminal or critical illness or permanent disablement, or to meet the healthcare costs of the person assured.
  • trusts holding insurance policy benefits received after the death of the person assured, providing the benefits are paid out from the trust within two years of the death.
  • charitable trusts which are registered as a charity in the UK, or which are not required to register as a charity.
  • 'pilot' trusts which were set up before the 6th of October 2020 and which hold no more than £100 – pilot trusts set up after the 6th of October 2020 will need to register.
  • 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'.
  • Will trusts which are created by a person's Will and come into effect on their death providing they only hold the estate assets for up to two years after the person's death.
  • 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.
  • 'financial' or 'commercial' trusts created in the course of professional services or business transactions for holding client money or other assets.
  • Implied trusts such as a resulting or constructive trust imposed by a Court, or a trust set up by statute.

Once the trust is registered, the Trustees have a duty to update the register if there is a change to the trust or when the trust ends. For the non-taxable trusts, the deadline to update the register is within 30 days of the change or of the termination of the trust.

Trustees may be liable for HMRC penalties if a registrable trust is not registered or if changes to a registrable trust are not reported before the relevant deadlines.

If you are a Trustee or a professional adviser acting for Trustees and you are unsure of how the new trust registration requirements may apply to a trust that you are dealing with, or if you require general trusts advice or assistance, Sarah Nash, a senior Solicitor and STEP member in the Private Client Team at Alexander & Co Solicitors, would be happy to advise you further.

For an initial no-obligation discussion, please contact Sarah Nash on 01332 600005/ Sarah.Nash@AandCo.co.uk.

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.