In June 2017, HMRC introduced the Trust Registration Service (TRS) following the adoption of the 4th Anti-Money Laundering Directive.
This was implemented in order to improve transparency around the beneficial ownership of assets held in trusts. The 5th Money Laundering Directive came in to force on 10 January 2020 and this has resulted in a number of changes to the TRS requirements which took effect from 6 October 2020.
What has changed?
The definition or trusts required to register has widened, there are changes to the deadlines for registration and changes to the deadline for reporting changes of registered information.
Also, certain trusts without tax liabilities will now have to register.
What trusts now need to register?
All UK express trusts, regardless of whether they have a UK tax liability;
Some non-UK express trusts, such as those who have no UK trustees but own land or property within the UK and trusts with at least one UK trustee which acquires UK property or enters into a business relationship with a relevant person in the UK, for example a financial advisor;
Non-express trusts and excluded express trusts where they have a tax liability. These must be registered to receive their Self-Assessment (SA) Unique Tax Payer Reference (UTR) which is required to submit SA tax returns.
What are the deadlines?
There are different deadlines for different trusts so, it can be hard to keep track of when they each need to register.
For trusts who now have a UK tax liability (and who had not needed to register previously), the registration deadline is 1 September 2022.
Whilst interim provisions are in place for those trusts which incur a UK tax liability in the 90 days prior to 1 September, going forward these trusts must register within 90 days of the tax liability.
For non-UK trusts which hold UK land, if they acquired it before 6 October 2020, there is no need to register at present, if the trust does not have a UK tax liability. Once these trusts incur a UK tax liability though, the deadline is 90 days.
For trusts which have acquired UK land on or after 6 October 2020, the registration deadline of 1 September 2022 applies (or 90 days after the tax liability, whichever is the later).
Are any trusts excluded?
Unless they have a UK tax liability, the following trusts are not required to register:
UK registered pension trusts
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
A trust which is holding insurance policy benefits received after the death of the person assured — as long as the benefits are paid out from the trust within 2 years of the death
A charitable trust that is registered as a charity in the UK or which are not required to register as a charity
A ‘pilot’ trust set up before 6 October 2020 and holds no more than £100
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’
A will trust which comes into effect on the person’s 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
What records do trustees need to keep?
The regulations require trustees to maintain accurate and up to date written records of all the actual and potential beneficial owners of the trust. The following information must be maintained:
Full name of the trust
The date on which the trust was created
The country where the trust is considered to be resident for tax purposes
The place where the trust is administered
A contact address for the trustees
Full name of advisers who are being paid to provide legal, financial or tax advice to the trustees in relation to the trust
Details of the settlors and beneficiaries
Under the legislation any law enforcement authority can request information about the beneficial owners of the trust including from a trust which does not incur a liability to any of the relevant UK taxes so it’s important to maintain accurate records.
Don’t forget the ‘no change’ declaration
All registered trusts than need to make an annual declaration that the information on the TR is accurate and up to date.
This declaration must be made annually by 31 January, regardless of whether there have been any changes or not and penalties may apply if this is not completed.
Next steps
The rules in respect of trust registration are complex.
The full Trust Registration Service Manual can he found on the government website here.
