You should now register all UK trusts and some non-UK trusts on HMRC’s Trust Registration Service (TRS), unless the trust is specifically excluded due to its characteristics. Failure to register, can result in a penalty.
What Trusts should be registered?
- all UK express trusts, whenever established with no backstop date, provided in existence on or after 6 October 2020;
- non-UK express trusts that acquire an interest in land in the UK on or after 6 October 2020 and
- non-UK express trusts that have at least one trustee resident in the UK and which enter into a business relationship on or after 6 October 2020 with a relevant person in the UK
HMRC has stated that an express trust is one that has been deliberately created by a settlor using a written document such as a Will, Deed or Declaration of Trust.
Key examples include:-
- Trusts for jointly held property where the beneficial title differs from the legal title e.g. the owners are holding the property for the benefit of others.
- Complex estates – those with substantial CGT or income tax liabilities
- Nil rate band trusts holding property interest or debt
- Will trusts exceeding 2 years post death
- Small pilot trusts – if holding £100+ or set up after 6/10/2020
Which Trusts are exempt?
The following is not an exhaustive list but sets out some of the exclusions – unless liable to UK tax.
- Trusts imposed by statute such as on intestacy or bankruptcy.
- Trusts created by court orders such as on divorce or following a dispute.
- Co-ownership trusts where the legal and beneficial owners are the same people i.e. where a couple jointly own their home or have a joint bank account.
- 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’.
- Trusts set up before 6 October 2020 holding assets valued at less than £100.
- Will trusts which are wound up within two years of death.
- Trusts for bereaved minors.
- Trusts where beneficiary is disabled.
- Trusts of life policies paying out on death, terminal illness or disability.
- UK charitable trusts.
- Maintenance Fund Trusts (trusts approved by HMRC for the maintenance of specific historic buildings or land).
- Trusts created to set up a bank account for minors or vulnerable people.
- Trusts holding insurance policy benefits.
- Trusts holding healthcare, life or retirement policies.
- ‘Financial’ or ‘commercial’ trusts created in the course of professional services or business transactions for holding client money or other assets.
When should the Trusts be registered?
- Non-taxable trusts which in existence on 6th October 2020 must register by 1st September 2022.
- Non-taxable trusts created after 6th October 2020 must register within 90 days or by the 1st September 2022, whichever is the later.
- Relevant taxable trusts must register by 31 January (or in some cases 5 October) following the end of the tax year in which the trust acquires a liability to relevant UK tax.
- Changes to TRS records on trusts and/or beneficial owners must be notified within 90 days of the date of the change.
- A trust which was in existence on 6 October 2020, or created since then, and now closed still needs to register by 1 September 2022. It should be removed from the register after it has been registered.
- The liability rests with the trustees and failure to register could mean financial sanctions for the trustees involved.
This is not an exhaustive list- other types of trusts may also fall within the requirement for registration. For more examples, see www.gov.uk/hmrc-internal-manuals/trust-registration-service-manual/trsm10030
Further information
For more information on registrable and excluded trusts, please see www.gov.uk/guidance/trust-registration-extension-an-overview
More detailed technical information can also be found in the Trust Registration Service Manual at www.gov.uk/hmrc-internal-manuals/trust-registration-service-manual.
If you think the obligation to register a trust affects you, and you would like assistance in the registration of the trust, please contact our Private Client team
