Trust Registration Service – Deadline upcoming
In June 2017, HMRC introduced the Trust Registration Service (TRS) following the adoption of the 4th Anti-Money Laundering Directive to improve transparency around the beneficial ownership of assets held in trusts.
New rules introduced on 6 October 2020 under the 5th Money Laundering Directive to extend the scope of the trust register to UK and some non-UK trusts, with some specific exclusions, regardless of whether or not the trust is liable to pay any tax.
In addition, the new changes affect the deadline for registration of trusts and the deadline for reporting changes of registered information.
Which trusts now need to register?
- All UK express trusts, regardless of whether they have a UK tax liability;
- Some non-UK express trusts, such as those who have no UK trustees but own land or property within the UK and trusts with at least one UK trustee which acquires UK property or enters into a business relationship with a relevant person in the UK, for example a financial advisor;
- Non-express trusts and excluded express trusts where they have a tax liability. These must be registered to receive their Self-Assessment (SA) Unique Taxpayer Reference (UTR) which is required to submit SA tax returns.
Are any trusts excluded?
Unless they have a UK tax liability, the following trusts are not required to register:
- UK registered pension trusts;
- Trusts 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
- A trust which 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 two years of the death;
- A charitable trust that is registered as a charity in the UK or which are not required to register as a charity;
- A ‘pilot’ trust set up before 6 October 2020 and holds no more than £100;
- Co-ownership trusts 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’;
- A Will trust which comes into effect on the person’s death, providing they only hold the estate assets for up to two years after the person’s death;
- Trusts 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;
- ‘Financial’ or ‘commercial’ trusts created in the course of professional services or business transactions for holding client money or other assets.
What are the Trust Registration Service deadlines?
There are different deadlines depending on the type of trust so it can be hard to keep track of when they each need to register.
- For trusts who now have a UK tax liability (and who had not needed to register previously), the registration deadline is 1 September 2022.
- Whilst interim provisions are in place for those trusts which incur a UK tax liability in the 90 days prior to 1 September, going forward these trusts must register within 90 days of the tax liability.
- For non-UK trusts which hold UK land acquired before 6 October 2020, there is no need to register unless the trust has a UK tax liability. If the trust becomes taxable, the deadline is 90 days from the date of the liability.
- For trusts which have acquired UK land on or after 6 October 2020, the registration deadline of 1 September 2022 applies (or 90 days after the tax liability, whichever is the later).
What records do trustees need to keep?
The regulations require trustees to maintain accurate and up to date written records of all the actual and potential beneficial owners of the trust. The following information must be maintained:
- Full name of the trust;
- The date on which the trust was created;
- The country where the trust is considered resident for tax purposes;
- The place where the trust is administered;
- A contact address for the trustees;
- Full name of advisers who are being paid to provide legal, financial or tax advice to the trustees in relation to the trust;
- Details of the settlors and beneficiaries.
Under the legislation any law enforcement authority can request information about the beneficial owners of the trust including from a trust which does not incur a liability to any of the relevant UK taxes so it’s important to maintain accurate records.
Don’t forget the ‘no change’ declaration
All registered trusts than need to make an annual declaration that the information on the TRS is accurate and up to date.
This declaration must be made annually by 31 January following the end of the tax year, regardless of whether there have been any changes or not. Penalties may apply if this is not completed.
The rules in respect of trust registration are complex and as such, we are assisting trustees and third party providers with their TRS compliance. Please get in touch if you would like any assistance with the TRS.
The full Trust Registration Service Manual can be found on the government website here.
The information was correct at time of publishing but may now be out of date.