The rules for trust registration are complicated and have evolved over time. The following is a general guide to the service and should not be construed as legal advice. Full details of the rules and process can be found in HMRC’s Trust Registration Service Manual.
What is the Trust Registration Service?
Broadly, the Trust Registration Service (TRS) is a central register of trusts, created in 2017 to implement the Money Laundering Regulations (replacing the old form 41G). It is administered by HMRC and contains information such as who the trustees are, who can benefit from the trust and what assets are in the trust. The information will be available to interested parties, in limited circumstances.
Originally, trustees were simply required to register on the TRS if the trust was liable to pay any of the main UK taxes. Nowadays, most UK trusts (and some non-UK trusts) are required to register, even if there’s no UK tax to pay.
The registration process allows trustees or their agents to register the trust. However, it is ultimately the responsibility of the trustees to ensure that this has happened.
Why are we talking about this now?
The requirement for trust registration has been extended to include more trusts than ever before. There will inevitably be many trustees who are completely unaware of the additional responsibility to register their trusts.
There is a significant deadline which is fast approaching. All trusts which are brought into the registration regime by the latest developments have until the 1st September 2022 (or 90 days from when the duty to register the trust has arisen, if later) to register their trusts.
The process for registration is not straightforward and therefore action needs to be taken at this early stage.
Which trusts need to register?
In simple terms, most UK taxable trusts, express UK trusts, and many non-UK trusts are required to register. This will include almost all trusts.
UK taxable trusts
Any trust with a liability to any of the following UK taxes needs to register. This is regardless of where the trust is resident, or whether one of the exclusions (see below) applies:
- Capital Gains Tax
- Income Tax
- Inheritance Tax
- Stamp Duty Land Tax
- Stamp Duty Reserve Tax
- Land and Buildings Transaction Tax (in Scotland)
- Land Transaction Tax (in Wales)
UK express trusts
Even where no UK tax liability exists, most UK express trusts will have to register (with some exclusions). An ‘express’ trust is one which has been deliberately set up, rather than a trust that can arise through the operation of the law.
Typically, an express trust might be, say, a lifetime trust or perhaps a discretionary Will trust. However, there are many other types, and any express trust which is not excluded (see below) will be caught.
It is quite usual for a trust to fall into both categories – for example a discretionary trust which also produces income.
In this context, a non-UK trust is usually one where some or all of the trustees are non-UK resident. The rules are slightly different depending on whether there is a UK-resident trustee.
A trust which has at least one UK trustee may be required to register if it enters into a business relationship with a UK service provider (on or after the 6th October 2020). This would include, for example, banks, investment managers, lawyers, accountants, tax advisers, trust and company service providers, and property agents.
A non-UK trust may also be required to register if it acquires real estate in the UK, regardless of the residence of the trustees. In this context, real estate is land registered at the Land Registry acquired on or after the 6th October 2020.
As mentioned, if the trust has UK tax liabilities, it will be required to register in all cases.
The exclusions are very limited and a prudent trustee will take advice on their specific trust. However, as a general rule, the following trusts are excluded from registration (unless they give rise to a UK tax liability):
- trusts which come into existence by operation of law (such as trusts created on intestacy or by a court order)
- trusts relating to joint ownership of property (for example, land or bank accounts) where the legal and beneficial owners are the same
- charitable trusts registered as charities in the UK
- trusts holding assets of a registered pension scheme
- trusts holding life policies which pay out on death, terminal or critical illness or permanent disability of the person assured
- trusts arising on death under a person’s Will unless it is in existence for more than two years after their death
- pilot trusts which hold no more than £100 and which are in existence before the 6th October 2020;
- trusts which are required to meet statutory conditions (for example, trusts for vulnerable beneficiaries or employee trusts)
HMRC has confirmed that trusts required in order to open a bank account for a child are excluded from registration (but notably not a grandparent buying a junior ISA for a grandchild).
Estates are also generally excluded from registration unless they are ‘complex’ (an estate tax return is required) or it included a Will trust that lasts more than two years.
Note that there is no specific exclusion from registration for bare trusts, and the same rules apply.
This means that there will be many trust arrangements which have been in existence for many years (and may have even been forgotten about) which will suddenly become registrable.
What information must be provided?
Trusts which have UK tax liabilities are required to provide information including:
- the name and date of the trust
- information about the trust assets, including their value
- the place where the trust is resident (or administered)
- the identity of the beneficial owners of the trust
The beneficial owners include the settlor, the trustees and the beneficiaries.
Trusts which are not UK taxpayers only have to provide information about the beneficial owners of the trust and do not, for example, have to provide information about the trust assets.
The registration process
Registrable taxable trusts are required to register by the 31st January (or the 5th October in some cases) following the end of the tax year in which the trust had a liability to UK taxation. For all other trusts that are required to be registered, the relevant deadline is the 1st September 2022 (or 90 days from when the duty to register the trust has arisen, if later).
Once registered, information will remain on the register for at least six years after the trust is terminated or the information becomes obsolete (because, say, a trustee has been replaced).
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 need to have a Government Gateway user ID and password.
Alternatively, the trustees may register through an agent, using an agent’s Government Gateway account. The agent will first need to have registered as an agent and created an agent services account.
Once the trust has been registered, the trustees will have an obligation to update the details within 30 days of them becoming aware of any changes to the information previously reported (such as new trustees or a change in the assets). There is, therefore, an ongoing responsibility for the trustees to maintain the trust register moving forwards.
What happens if you don’t register the trust?
If you miss the applicable deadline for registration, HMRC are able to impose penalties, so there is a financial consequence of missing the relevant deadlines.
If you need assistance with the Trust Registration Service, we would be happy to talk to you about the options. Please get in touch on 0118 40 50 131, or by email at firstname.lastname@example.org.