In this article, Rosanna Derryman Associate in our Private Client team discusses the upcoming changes to the rules regarding the registration of trusts.
Trust Registration Service – do you need to register your trust?
All taxable and non-taxable UK express trusts and non-UK express trusts now need to be registered with HM Revenue and Customs under the new Trust Registration Service (TRS) by 1 September 2022 to make sure the trust complies with anti-money laundering regulations.
Which trusts do not need to be registered?
The following examples do not need to be registered unless they are liable to pay UK tax:
- the trust is used to hold money or assets of a UK registered pension scheme — such as an occupational pension scheme
- the trust is 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
- the trust is holding insurance policy benefits received after the death of the person assured — as long as the benefits are paid out from the trust within 2 years of the death
- it’s a charitable trust that is registered as a charity in the UK or which is not required to register as a charity
- it’s a ‘pilot’ trust set up before 6 October 2020 and holds no more than £100 — pilot trusts set up after 6 October 2020 will need to register
- it’s a co-ownership trust 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’
- it’s a will trust created by a person’s will and comes into effect on their death providing they only hold the estate assets for up to 2 years after the person’s death.
- it’s a trust 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
- it’s a ‘financial’ or ‘commercial’ trust created in the course of professional services or business transactions for holding client money or other assets.
All non-taxable trusts set up on or after 6 October 2020 but wound-up before 1 September 2021 will still need to be registered with the TRS.
Where such trusts become registrable on or after 4 June 2022, the trustees will have to register within 90 days of the trust becoming registrable.
The registration deadline for taxable trusts depends on when the trust was created, the tax the trust is liable for and if it has been liable for Income Tax or Capital Gains Tax before.
Update and maintain the trust register
Once the trust has been registered with HMRC any changes to the trust’s details must be made within 90 days and details of the trust must be kept up to date.
If the trust is liable to tax for any tax year, the lead trustee will need to declare that the trust register is up to date on an annual basis.
Failure to register a trust
HMRC will enforce penalties if you do not register the trust or keep the details on the register up to date. It has been suggested they will start with a light touch, and that letters will be sent for first offences with a proposed penalty of £100 for any subsequent offences and more stringent penalties for trustees who deliberately ignore the registration requirements.
Claiming a trust and authorising an agent to access the trust
You can authorise an agent to assist you with registering the trust and managing the trust’s details for you. This is something that we here at Stokes Partners are happy to do for you.
If you require assistance to register a trust or for more details please contact a member of the team on 01460 279285.