Deadline for non-taxable trust registrations announced
When you put assets in a trust, they are under the control of an appointed person or persons called ‘trustees’. The trustees then manage the trust according to your instructions, even after your death.
New rules were introduced on 6 October 2020, as part of the UK’s implementation of the Fifth Money Laundering Directive (5MLD), that extend the scope of the Trust Register to all UK and some non-UK trusts that are currently open, whether or not the trust has to pay any tax, but with some specific exclusions.
Preventative work in the field of anti-money laundering
From 1 September 2021, the extended Trust Registration Service (TRS) opened for non-taxable trust registrations, with non-taxable trusts having until 1 September 2022 to register. Under the new rules, organisations and persons involved in preventative work in the field of anti-money laundering, counter-terrorist financing and associated offences can request access to details on the register about the people associated with a trust.
The information will only be released on request in certain limited circumstances and anyone with a legitimate interest will be able to view information on the TRS from late 2022. HMRC has stated that ‘each request will be reviewed on its own merits, and access given only where there is evidence that it furthers work to counter money laundering or terrorist financing activity.’
There are also safeguarding measures to protect trusts with minors and vulnerable beneficiaries from requests for information from third parties.
Trusts that need to be registered
Trusts that need to be registered are broadly all UK express trusts, unless they are specifically excluded; and non-UK express trusts that acquire land or property in the UK, or 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.
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 two 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 two 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 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
Excluded from registration
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
Taxable and non-taxable trusts
You should obtain professional advice if you are unsure whether a product or arrangement is a trust or if it should be registered. The trustees or agents will have to give some basic information about the persons involved in the trust (the settlors and beneficiaries). This will apply to both taxable and non-taxable trusts.
Registerable taxable trusts are required to register by 31 January following the end of the tax year in which the trust had a liability to UK taxation, or 5 October after the end of the tax year for a first-time liability to Income Tax or Capital Gains Tax.
Further guidance and confirmation
From 2022 onwards, any beneficial ownership information of a trust registered on TRS must be kept updated. Trustees must notify HMRC of any changes to registered information within 90 days from the date the trustees become aware of the change; further guidance and confirmation of procedures is expected from HMRC in due course.