A new registration system for trusts has been introduced by HMRC. This has significantly widened the number of trust arrangements which will now need to be registered with HMRC, even if the trust does not need to pay tax. Even simple trusts (for example where one person is named on the legal title to property, but holds it on trust for themselves and others) fall within the registration regime. Any individual who is a trustee of any form of trust, should review their position to check if they have an obligation to register with HMRC before the initial deadline of 1 September 2022.
1. What is the Trust Registration Service?
The Trust Registration Service (TRS) is a register of the beneficial ownership of trusts. It is managed by HMRC and intended to combat money laundering, serious crime and terrorist financing. The new rules require all express UK trusts, even those not liable to tax, to register with HMRC, unless specifically excluded.
2. Which trusts must register?
All UK express trusts must register except for a limited number of specifically excluded trusts (such as pension schemes, charitable trusts, policy trusts paying out on death or critical illness or existing trusts with a value of less than £100 created prior to 6 October 2020).
A trust established in a Will must be registered if the trust continues to be in existence more than two years after the date of death.
Property trusts (where the legal owner of property is not the same as the beneficial owner) must also register. For example, where one person holds the legal title to property on trust for themselves and another person, this would be a property trust required to be registered with HMRC. However, where the legal owner(s) of property are the same as the person(s) entitled to benefit from the property, there is no requirement to register (e.g. where a married couple are both named on the legal title and are both entitled to share all the equity in the property).
3. What are the deadlines for registration?
Trusts that are not liable to pay tax created on or before 6 October 2020 must register by 1 September 2022. Trusts that are not liable to pay tax created after 6 October 2020 must be registered within 90 days of being created, or on or before 1 September 2022 (whichever is later). Trusts liable to tax created after April 2021 must be registered within 90 days of the trust becoming liable for tax or on or before 1 September 2022 (whichever is later).
A trust created by Will that holds only property from the estate of the deceased person is excluded from registration as an express trust for a period of two years from the date of death.
After registration, changes to the trust details or circumstances must be registered within 90 days of the change.
4. Where can I find more information?
You can find more information about the TRS and trustees’ obligations to register trusts at https://www.gov.uk/guidance/register-a-trust-as-a-trustee
5. Can I ask an agent to help me register?
Trustees can register their trust directly with HMRC. Alternatively, trustees may ask an agent to assist them with registration. We can register trusts for clients. If you require assistance with this, please contact us for further details.