One Month to Register Non-Taxable Trusts

The deadline for registrations for non-taxable trusts in existence on 6 October 2020 is 1 September 2022. Those non-taxable trusts created after 6 October 2020 must register within 90 days of being created or otherwise becoming subject to registration by 1 September 2022 (whichever is later). Once registered, trustees will have 90 days from when they are aware of any changes to update the register.

HMRC established the Trust Registration Service (TRS) back in 2017 which is an online platform that trustees are required to use to fulfil their registration obligations for trusts. The main purpose of the TRS is to reduce the risk of trusts being used for facilitating money laundering. The register includes details of all parties to the trust including the settlor, trustees and beneficiaries. It is the responsibility of the Trustees to keep the TRS updated.

Trusts which are taxable (ie those with any UK tax liability such as income tax, capital gains tax, inheritance tax, SDLT) should already have registered with HMRC by 31 January following the end of the tax year in which the first tax charge occurred.

New Changes

HMRC extended the TRS to include non-taxable express UK trusts after the UK implemented the EU’s 5th Money Laundering Directive (5MLD).

Express trusts are those created by a written deed and typically include those used for estate and IHT planning and as such do not normally have any tax charges year on year e.g. the underlying asset may be an investment bond which allows tax to be deferred until money is withdrawn (although there are sometimes IHT periodic charges or exit charges if the trust assigns the bond to a beneficiary).

Exemptions

HMRC has provided details of certain trusts which do not need to register, including:

• 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 – but 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

Penalties

HMRC may issue penalties if the trustees fail to comply with the registration or notification deadlines.

Action needed

Check at https://www.gov.uk/guidance/register-a-trust-as-a-trustee whether you need to register your trust and if so, complete your registration using this link.

Please get in touch with us or visit the Trust and Trust Administration page on our website if you would like further information or advice on trusts.