Back in 2020, the government introduced new trust registration rules as part of the UK’s implementation of the Fifth Money Laundering Directive. The online Trusts Registration Service (TRS) was originally set up in 2017 as a register for trusts that had to pay tax.
The new rules impose additional obligations on those trusts already registered and extends the requirement to register to many non-tax paying trusts for the first time.
All trustees have a legal duty to comply with HMRC reporting requirements. Failure to do so, or failure to notify any changes, could result in a penalty being charged on the trust.
So, here’s everything you need to know about registering trusts on the TRS and what you need to be aware of to ensure that you comply with reporting obligations. If you need additional help on the website registration process, you can download our full guide here.
The TRS time frame
Apart from some specific exceptions, all existing UK trusts, and some non-UK trusts, will be required to register with HMRC by 1 September 2022, irrespective of whether the trust has to pay any UK tax.
Trusts already in existence on 6 October 2020 must register by 1 September 2022 (even if they are now closed).
New trusts created after 1 September 2022, are required to be registered within 90 days, as must any changes to new or existing trusts.
Deadlines for registration
Originally, the TRS required all trusts that fell under the jurisdiction to register by 10 March 2022. However, following a delay in the roll-out of HMRC’s upgraded TRS register, the registration deadline now depends on the type of trust.
The deadline for each type of trust is as follows:
||Before or on 6 October 2020
||After 6 October 2020
|Is the trust registered for Self Assessment (SA) for Income Tax or CGT?
||Must be registered by 1 September 2022
|Must be registered within 90 days of being created
or by 1 September 2022 (whichever is later)
||Before 6 April 2021
||On or after 6 April 2021
|Is the trust registered for SA for Income Tax or CGT?
||If the trust is already registered for SA and incurs a UK tax liability in a given tax year, then it must be registered by 31 January after the end of that tax year
||The trust must be registered within 90 days of the trust becoming liable for tax or 1 September 2022 (whichever is later)
|If the trust is not registered for SA and incurs an Income Tax or CGT liability for the first time in a given tax year, then it must be registered by 5 October after the end of the tax year
If the trust is not registered for SA and does incur other taxes* in that tax year, then it must be registered by 31 January after the end of that tax year
* Other taxes – IHT, Stamp Duty Land Tax, Stamp Duty Reserve Tax, Land and Buildings Transaction Tax (Scotland) or Land Transaction Tax (LTT) in Wales
Registering for an Organisation Government Gateway login
Remember to factor in the time it may take to register for an Organisation Government Gateway user ID and password on the government website.
For this, you’ll need to provide an email address that you are happy to link to the trust’s Government Gateway account, and the full name of the person registering.
The types of trust you need to register
Under the new rules, trustees or their agents must register any trust with the TRS unless they are exempt, whether or not they have to pay tax.
Trusts that you do not need to register
Certain trusts do not need to register unless they are liable to pay UK tax.
Exempt trusts include:
- Trusts used to hold life or retirement policies providing that the policy only pays out on death, terminal or critical illness, permanent disability, or to meet the healthcare costs of the life assured
- Trusts used to hold money or assets of a UK-registered pension scheme, such as an occupational pension scheme
- Trusts imposed by statute such as on intestacy or bankruptcy
- Trusts that are registered as a charity in the UK, or that are not required to register as a charity
- Trusts holding insurance policy benefits received after the death of the life assured, providing the benefits are paid out from the trust within two years of the death
- “Pilot” trusts set up before 6 October 2020 and which hold no more than £100 (pilot trusts set up after 6 October 2020 will need to register)
- Co-ownership trusts where the legal and beneficial owners are the same people (commonly found where a couple jointly own their home or have a joint bank account)
- Financial or commercial trusts created in the course of professional services or business transactions with the purpose of holding client money or other assets.
Trustees must also register non-UK express trusts that acquire land or property in the UK or those that have at least one trustee resident in the UK and enter into a “business relationship” within the UK.
Details you will need to provide
As part of the registration, trustees must provide certain details relating to the trust. These include:
- The identity of the trustees
- The settlor
- The beneficiaries
- Trust assets (only if the trust has a tax liability).
Trustees have 90 days to update the TRS after becoming aware of any changes to the information held on the register – for example, the retirement or appointment of new trustees.
Alternatively, trustees must confirm that there have been no changes on an annual basis.
Penalties for trustees failing to register or update on time
If you fail to register or update the information on time and cannot show HMRC that you took reasonable steps to do so, penalties may apply.
The penalties are:
- £100 for registering up to three months after the deadline
- £200 for registering between three to six months after the deadline
- £300 or 5% of the total tax liability in the relevant year (whichever is higher) for registering more than six months after the deadline.
Penalties will be reviewed on a case-by-case basis and so won’t be issued automatically.
How First Wealth can help
The introduction of the TRS creates a lot of change to consider. To help you understand whether you must register your trust and, if so, your obligations and how to register, we have put together a comprehensive guide, which you can download on our website.
Where we can help, we will.
For example, if we were involved in the trust set up, we can supply you with some of the details required for the registration process. Please get in touch if you need any information to help you register your trust with the TRS.
Since we are not an authorised accountancy services provider, we aren’t able to register the trust on your behalf.
Should you need tax or legal advice, we recommend that you speak to a relevant professional. If you’d like us to recommend a trusted lawyer or accountant, please get in touch.
Get in touch
If you need help in understanding more about the Trust Registration Service and your obligations, please email firstname.lastname@example.org or phone us on 020 7467 2700.
This document is marketing material for a retail audience and does not constitute advice or recommendations. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested.