Ready for online trust registration?
A new online Trust Registration Service announced by HMRC will mean that nearly all UK and some non-UK trusts that are currently in existence, whether the trust has to pay any tax or not, will need to be registered online.
Online Trust Registration Service
In 2020 under the implementation of the Fifth Money Laundering Directive, it was announced that all “Express Trusts” had to be registered with the new online Trust Registration Service (“TRS”) by March 2022.
HMRC have confirmed that it will not meet the target for upgrading the TRS in time and has extended the deadline for registration indefinitely.
It is expected that the new deadline for registration, by either the trustees or their agents, will be approximately 12 months from the date that the system is completed.
The existing rules remain that any trust must be registered if the trust is liable to pay any of the following taxes and the deadline for registering these trusts depend on whether it is a new trust and the type of tax becoming liable:
- Capital Gains Tax
- Income Tax
- Inheritance Tax
- Stamp Duty Land Tax
- Stamp Duty Reserve Tax
- Land and Buildings Transaction Tax (in Scotland)
- Land Transaction Tax (in Wales)
The new rules will mean that nearly all UK and some non-UK trusts that are currently in existence, whether the trust has to pay any tax or not, will need to be registered but with some specific exclusions.
Trusts that need to be registered
These are broadly:
all UK express trusts, unless they are specifically excluded (see below)
non-UK express trusts that:
- acquire land or property in the UK
- have at least one trustee resident in the UK and enter into a ‘business relationship’ within the UK
- If the trust needs a Unique Taxpayer Reference (UTR) for Self-Assessment purposes, it must still register to get this, even if it’s highlighted in the exclusion list.
Trusts that do not need to be registered
Certain trusts do not need to register unless they are liable to pay UK tax. These include:
- trusts used to hold money or assets of a UK-registered pension scheme, such as an occupational pension scheme
- 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
- trusts holding insurance policy benefits received after the death of the person assured, providing the benefits are paid out from the trust within 2 years of the death
- charitable trusts which are registered as a charity in the UK, or which are not required to register as a charity
- ‘pilot’ trusts which were 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 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’
- will trusts which are created by a person’s will and come into effect on their death providing they only hold the estate assets for up to 2 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
- Other less common types of express trusts which are set up for particular purposes are also excluded from registration unless they have to be registered because they are liable to pay tax. These are set out in the legislation and will be described in the detailed guidance.
- Trusts which are not set up deliberately by a settlor but are imposed by Courts or created by legislation, are not ‘express trusts’ and therefore do not have to register unless they are liable to tax. Examples of such trusts include a trust:
- set up under the intestacy laws when a person dies without a valid will and the assets in the estate are held by a trust before passing to relatives
- set up under a Court Order to hold compensation payments
- to hold jointly owned assets, such as a home jointly owned with a spouse, partner, or relation as ‘joint tenants’, or a joint bank account.
The above is intended as a brief overview and does not cover every scenario.
How a solicitor can help with online Trust Registration
Trusts can be legally and technically complex, and all trustees will have to consider their obligation to register the trust with HMRC. At GL Law, we can act as an Agent on behalf of the trustees. We can help identify if registration is required, assist you in gathering the relevant information required in advance of the reporting deadline, and then complete the registration process in order for the trust to remain compliant.
If you would like to find out more about this service, please contact Heledd Wyn or Ben Coulson by calling 0117 906 9400 or email email@example.com