25.01.22

Many of our clients have created Trusts. Some of our clients have done this to protect an inheritance for a disabled or vulnerable loved one and some have done this for tax planning purposes. Whatever your reason for creating a Trust, the law recently changed and you need to consider whether you now have to register your Trust with HMRC.

This blog (which is limited to advice relating to UK Trusts) aims to give our clients guidance on whether or not this change in law affects them.

How did this come about?

In 2017, the Fourth Money Laundering Regulations required Trustees of Trusts which were taxable to register the Trust’s details with HMRC online on the Trust Registration Service (TRS).

Under the 2020 Fifth Money Laundering Regulations, the requirement to register Trusts with the online TRS has been expanded to all UK Express Trusts subject to a few exclusions.

The new Regulation was brought in following our withdrawal from the EU and requires HMRC to maintain a publicly accessible register of Trusts and to allow access to that data to an individual or organisation that demonstrates a legitimate interest.

Implementation was postponed a number of times whilst HMRC put in place a system to enable Trustees to comply with the requirements of the TRS. This was finally launched in September 2021 and registration now has to take place before 1 September 2022.

Which Trusts are affected?

All UK Express Trusts created on or after 6 October 2020, unless they are specifically excluded. This applies even if no tax is payable by the Trust.

Express Trusts are ones created deliberately. There will be a written Deed, or Settlement, or Declaration of Trust for the Trust.

Trusts created in the Will of someone who has not died is not an Express Trust and is not included in the reporting requirements until someone dies.

Which Trusts are excluded?

This list is quite lengthy, but most importantly for our clients, the list includes:

  • Pilot Trusts set up before 6 October 2020 holding no more than £100;
  • Trusts holding assets for a disabled person (Disabled Person’s Trusts) where the Trust does not have to pay tax;
  • Personal Injury Trusts;
  • Declarations of Trust (DoT) where the people registered as the owners are the same as those entitled to the asset, for example, where the DoT relates to a property and the people named with the Land Registry are the same as the DoT says should receive the net sale proceeds;
  • Trusts created in the Will of someone who has died BUT only for the period of two years from the date of death;
  • Bereaved Minors Trusts and aged 18-25 Trusts. These are those referred to in ss71A and ss71D of the Inheritance Tax Act 1984; and
  • Those Trusts which are highly regulated elsewhere or registered elsewhere such as Trusts created under an Intestacy, a Trust of a life policy where the life assured has not yet died and the policy has no value, and Trusts set up by a Court Order to hold compensation payments.

You can see a full list of excluded Trusts here.

So, which Trusts have to be registered on the TRS?

All UK Express Trusts which are not excluded. This includes:

  • Lifetime Discretionary Trusts created after 6 October 2020 and those created before 6 October 2020 that hold more than £100;
  • Lifetime Interest in Possession Trusts created after 6 October 2020 and those created before 6 October 2020 that hold more than £100;
  • DoTs where the people registered as the owners are not the same as those entitled to the asset;
  • Discounted Gift Trusts;
  • Most Bare Trusts; and
  • Trusts created in the Will of someone who has died AFTER the period of two years from the date of death.

What information do I need to register on the TRS?

For each of the Settlors, Trustees and named beneficiaries, the Trustees will need to put on the TRS:

  • Full name;
  • Date of Birth;
  • Country of residence;
  • Nationality of residence;
  • Role in the Trust; and
  • Mental capacity.

The Trustees will be asked to nominate a lead Trustee and for that person additional information will need to be given:

  • National Insurance Number;
  • Passport number and expiry date;
  • Unique Tax Reference Number;
  • Telephone number; and
  • Email address.

The information needed for the Trust itself is:

  • Name of the Trust;
  • Date it was set up;
  • Details and values of the assets in the Trust at the time of registration;
  • Country in which the Trust is administered;
  • Whether it is an Express Trust or not; and
  • Whether it is taxable or not.

What are the deadlines?

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

Non-taxable Trusts must be registered by 1 September 2022.

This gives some time for a comprehensive review of any Trust that you are a Trustee of to see if you need to register.

I’m a Trustee, what should I do?

You need to check to see if you have to register the Trust – look at the excluded list first.

If you have a Disabled Person’s Trust you do not need to register the Trust on the TRS unless the Trust has to pay tax.

If you have to register you now need to start gathering information. There will, no doubt, be a last-minute rush, so best get on and deal with this now.

What happens after registration?

There is an ongoing reporting requirement so regular reviews will be needed to ensure everything is reported properly. Any change to the Trust must be reported on the TRS within 90 days.

What happens if I don’t register in time?

HMRC will impose penalties for failure to report the Trust and update the TRS within the prescribed time frame. The penalties are higher for Trusts which are taxable.

You mention a publicly accessible register, what does this mean?

Requests for information are made to HMRC and can be a:

  • Obliged entity request – this would be used by Trustees to prove information on the TRS, for example, where they are instructing new Solicitors;
  • Legitimate interest requests – made by individuals or organisations who have an interest in a specified Trust, for example, conducting an investigation into money laundering; and
  • Third country entity requests – where a Trust holds a controlling interest in a non-EEA company or other legal entity.

HMRC can reject requests for information relating to a person who is under 18, lacks mental capacity or by giving the information a person is at risk of blackmail, extortion, violence or intimidation.

What’s the rule for Trusts created post 1 September 2022?

If they are reportable, the Trustees will have 90 days from the date of the Trust to complete the TRS.

How can we help?

Firstly, HMRC published an overview on 25 January 2021 which is quite useful to read. That can be viewed online here: www.gov.uk/guidance/trust-registration-extension-an-overview

If you would like to discuss your own Trust or have a question regarding your responsibilities as a Trustee, please get in touch and speak to one of our specialists on 01273 610 611 or email us at info@renaissancelegal.co.uk

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2 Responses to “New Trust registration rules – what all Trustees need to know”

  1. Martin Dalgleish says:

    Do I need to register a trust started on 2016

    • Stuart Price says:

      Dear Martin. Registration requirements depends on the type of Trust, but yes, unless specifically excluded most historic trusts now need to be registered. We will be happy to advise you on this.


Author:
Philip Warford

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