What you need to know about the Trust Registration Service deadline
Last month, you may have read our article explaining the immense value that trusts can offer you and your family, allowing you to secure your wealth for your loved ones.
In it, we briefly alluded to the deadline on 1 September for registering eligible trusts with the new Trust Registration Service (TRS), a register of the beneficial ownership of trusts.
Failing to register in time with the TRS could see penalty charges applied to your trusts, so it’s highly important to do so before the deadline passes.
Find out what you need to know about the TRS here, including rules, exceptions, and what you need to do next.
Complying with new money laundering rules
Replacing the former paper 41G (Trust) form, the TRS was first created in 2017 to ensure that UK trusts were compliant with European Union (EU) anti-money laundering regulations, known as the “Fourth Money Laundering Directive”.
This directive sought to combat money laundering, serious crime, and terrorist financing. Parties with a “legitimate interest”, such as law enforcement, are able to access the data on the TRS for this purpose.
While the UK has obviously now left the EU, keeping the TRS in place was part of the Brexit withdrawal agreement.
Crucially, new rules introduced in October 2020, known as the “Fifth Money Laundering Directive”, now require many existing UK trusts, as well as some non-UK trusts, to register with HMRC.
All UK and some non-UK trusts required to register
While there are a few exceptions, nearly all UK trusts and some non-UK trusts are now required to register with the TRS.
All UK express trusts (that is, those created deliberately by a settlor) that have incurred a tax liability in a given tax year must register.
Meanwhile, all non-UK express trusts will need to register if the trustees incur a tax liability on UK assets or receive UK source income.
Non-UK express trusts must also be registered if they either acquire land or property located in the UK, or if at least one trustee is resident in and enters into a “business relationship” in the UK.
Trustees or their agents are responsible for registering their trusts if the trust is subject to any of the following taxes:
- Income Tax
- Capital Gains Tax (CGT)
- Inheritance Tax (IHT)
- Stamp Duty Land Tax (SDLT) – this applies to Land and Buildings Transaction Tax (LBTT) in Scotland, or Land Transaction Tax (LTT) in Wales
- Stamp Duty Reserve Tax.
The trust must be registered regardless of whether there is a UK tax liability on the trust assets – that is, it must be registered if there’s the potential for a tax liability in future, even if there isn’t one currently.
Trustees are also required to provide details of the trust to HMRC, such as the identity of all trustees, the beneficial owners of the trust, and accurate information of the assets contained within it.
Of course, this information is liable to change, perhaps after the retirement or appointment of a new trustee. In that case, trustees will have 90 days to update these details.
If there have been no changes, trustees can then report this annually.
Not all trusts are required to register
There are a handful of exceptions to these rules that means some trusts do not need to be registered.
Unless they pay UK tax, below is a brief list of some types of trusts that will not need to register. This includes:
- Pension schemes and assets contained within a trust
- Charitable trusts, or those which are not required to register as a charity
- Co-ownership trusts, in which legal and beneficial owners are the same people
- Policy trusts that pay out on events such as permanent disability, terminal or critical illness, death, or for meeting healthcare costs
- Existing “pilot” trusts set up before 6 October 2020 with a value of less than £100
- Some non-express trusts, including but not limited to statutory trusts imposed in events such as bankruptcy or intestacy. Non-express trusts that have a UK tax liability need to be registered.
Please note that this list is not exhaustive. Make sure you speak to an expert if you’re unsure whether you need to register your trust.
Key dates to stay aware of for the TRS
Initially, the deadline for registration was 10 March 2022. However, a delay in rolling out the register from HMRC means that this deadline was delayed.
The table below shows the new deadlines for registering with the TRS, depending on the circumstances of the trust involved:
Must now be registered by 1 September 2022.
Non-taxable trusts that became registrable on or after 4 June 2022
Will have 90 days to register from the date that they first became registrable.
Taxable trusts set up on or before 5 April 2021
Must be registered by 5 October 2022.
Taxable trusts created on or after 6 April 2021
|Must be registered by 1 September 2022 if trustees become liable to pay UK tax before 4 June 2022.
Otherwise, these must be registered within 90 days of the trustee becoming liable to pay UK tax.
Trusts that have their first taxable event for Income Tax or CGT
Must be registered by 5 October in the following tax year after trustees first become liable for either tax.
Other trusts liable for UK taxes
Must be registered by 31 January in the following tax year after trustees become liable for tax.
To register a trust, the trustees, or an agreed “lead trustee”, can use the government website. However, it may be sensible to include an expert to assist you as collating all the necessary information can be a complicated process.
Have questions? Speak to us
If you’re unsure what the TRS deadline means for you, or you have any other questions about your trust planning, then please do get in touch with us at Britannic Place.
Email firstname.lastname@example.org or call 01905 419890 for more information.
This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.