Trust registration requirements first appeared in 2017 when the UK adopted the terms of the 4th Money Laundering Directive. The intention was to capture a substantial amount of data on trusts to ensure compliance with the directive and for HMRC reporting requirements. The advent of the 5th Money Laundering Directive has significantly expanded the scope of reporting requirements to include all non-exempt UK express trusts whether they are bare or relevant property trusts and regardless of being ‘taxable’.

Trustees are under a legal obligation to disclose details of trusts to HMRC and this can even include trusts that pay no tax. As a result, many trustees could be caught by this obligation to register. It is important that trustees adhere to HMRC’s requirements, particularly approaching 1st September 2022, to avoid any unnecessary penalties or criticism from the beneficiaries.

The Trust Registration Service (TRS) is implemented by HMRC and requires trustees of most UK trusts (but not all) to register details of a trust with HMRC. The TRS acts as a central register, with its dual purpose to record details of trusts and tackle money laundering.

 

Types of trusts

New law has widened the scope meaning many more trusts than before now must be registered. The following types of trusts must be registered even if they have no tax liability:

All UK express trusts — unless they are specifically excluded. An express trust is an arrangement created by a settlor, usually in writing, appointing trustees to manage trust assets for named beneficiaries (or a class of beneficiary). This includes discretionary trusts, declarations of trust for co-owners of property and trusts established under a Will on death.

The easiest way to identify if a trust should be registered is to look at those types of trusts that are excluded;

Examples of exempt trusts include:

  • trusts used to hold money or assets of a UK-registered 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.
  • trusts holding insurance policy benefits received after the death of the person assured, providing the benefits are paid out from the trust within 2 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.
  • 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 2 years after the person’s death.
  • trusts for bereaved children.

 

Deadlines and process for registering trusts

The relevant deadlines for the registration of trusts under the TRS are:

  • Non-taxable trusts in existence on or after 6th October 2020 must be registered by 1st September 2022.
  • Non-taxable trusts created after 1st September 2022 must be registered within 90 days of creation.
  • From 1st September 2022, changes to the trust details and/or circumstances must be notified within 90 days of the change.
  • Where trusts have incurred a UK tax liability in a tax year, those trustees should still comply with the existing timescales. So, for example, if the trust was liable to income tax or capital gains tax in 2020/21 for the first time, then the trustees should have registered the trust by 5th October 2021.
  • For taxable trusts that are created on or after 6th April 2021, the trust should be registered either 90 days of the trust becoming liable for tax, or by 1st September 2022 (whichever is later).

It is the responsibility of the trustees to register the trust when it is required. Failure to register the trust on time and to update the register with any changes may attract a financial penalty but as yet this is yet to be confirmed by HMRC.

 

How to register a trust?

To register a trust, or update the trust’s details, a ‘lead trustee’ will need to create a Government Gateway account. The trustee will then be able to enter the detailed information that is required to be reported to HMRC. Alternatively, trustees could authorise an agent to undertake the registration of the trust on their behalf. A Unique Tax Reference will be assigned to that trust. Therefore, a trust must first be registered before submitting trust tax returns or paying any tax that is due.

 

What is needed?

The following is an example of the type information that is required for both taxable and non-taxable trusts.

The trustee will need the following minimum information and more:

  • the name of the trust
  • the date the trust was created
  • to say if the trust is an express trust or not
  • Declare if the trust is taxable or not

These details and more will be in the trust deed and from any correspondence that the trust has had with HMRC.

 

Nominate a lead trustee

All trustees are equally legally responsible for the trust, but they must nominate one ‘lead’ trustee to be the main point of contact for HMRC. The lead trustee will receive the trust’s UTR if registering a taxable trust and a URN if registering a non-taxable trust. They will need to keep their contact information up to date.

 

Deceased Settlors

A settlor is an individual who has put assets into a trust.

The following must be provided:

  • date of birth
  • date of death
  • last known country of residence
  • country of nationality

 

Other individuals and organisations

For other individuals involved in the trust including more trustees, living settlors, protectors and beneficiaries a trustee requires their:

  • name
  • date of birth
  • country of residence
  • country of nationality
  • mental capacity at the time of registration – HMRC will specifically ask this question.

For all other organisations involved in the trust the following is required:

  • organisation name
  • address
  • country of residence

 

Beneficiaries

All known details of beneficiaries who can benefit from the trust must be given. If there are more than 25 beneficiaries in any one beneficiary type, keep a note of additional beneficiaries for any records.

 

Named Beneficiaries

Give details of all individuals, trusts, charities and organisations named as beneficiaries in the deed. Some named beneficiaries will only benefit when a certain event happens, such as when another beneficiary dies. The trustee can include these in a class of beneficiaries until the event occurs. At that point, provide their details on the register as a named beneficiary.

 

Useful information but what to do next?

Undoubtedly these new reporting requirements could create an additional administrative burden upon lead trustees and their advisers. BTWC’s Trust Registration Service is launching soon to help with this. Please register your interest now to find out the latest information as soon as it becomes available - contact us on 01522 500823 or email [email protected]