Registration of Trusts
In 2017, HMRC established the online Trust Registration Service (TRS): a digital platform to enable trustees to comply with their registration obligations and adding to the categories of Trust which need to register with HMRC.
The TRS is intended to reduce the risk of money laundering and make it more difficult for people to use trusts as a vehicle for committing financial crime. The TRS is governed by HMRC and requests key information regarding trusts in existence in the UK including, names, addresses and identification details of all settlors, trustees and beneficiaries, plus any key connected parties.
It is an obligation on the Trustees to register their Trust.
Registration of taxable vs non-taxable trusts
Registerable taxable trusts are trusts that have a liability to pay any tax i.e., inheritance tax, capital gains tax, income tax, LBTT and ADS. The deadline for registering existing taxable trusts has already passed, therefore all "taxable" trusts should now be on the register. The registration deadline for trusts within this category varies and we recommend seeking advice to ensure your registration obligation is met. In addition, your trust must be maintained and complete an annual declaration.
Registerable express trusts are trusts that were in existence on 6 October 2020 and are not due to pay any tax. The TRS opened for registration for these trusts in Autumn 2021. Trusts within this category must be registered by 1 September 2022 or within 90 days of the trust being established (whichever is later).
HMRC have advised that penalties may be charged if a trust is not registered before the registration deadline.
The register will not be publicly accessible. Law enforcement agencies across the world have access to, or can request information from, the register to help counter money laundering or terrorist financing, a third party may only request information if they have a "legitimate interest". Speculative searches are not possible. All personal data remains securely kept by HMRC.
Exemptions from Registration
HMRC have provided a number of exemptions from registration. These Trusts are only exempt where there is no tax due and include, but are not limited to:
- charitable trusts registered as a charity as in the UK;
- trusts for bereaved children under 18, or adults aged 18 to 25 set up under the will or intestacy of a deceased parent;
- trusts used to hold life or retirement policies where the policy pays out only on death, critical or terminal illness or permanent disablement; and
- 'pilot trusts' set up before 6 October 2020, holding £100 or less (note: pilot trusts established after this date will need to register).
How to register?
Registration of the trust can be completed here. Before completing the registration process, we recommend having the following information to hand:
- the trust name and date the trust was established – this can be found in the trust deed (the document responsible for establishing the trust);
- the trust address and telephone number;
- the country where the trust is based;
- details of the trust assets, including addresses of properties, and an estimated market value of any assets held by the trust;
- Tax reference number for the trust; and
- identity details (i.e. name, address, date of birth and NI number (or passport number, expiry date and country of issue) of the settlor, trustees, the beneficiaries (or class of beneficiaries); and any person exercising effective control over the trust, such as a protector or appointor.
Updates and annual declarations
The trust register requires every taxable trust to complete both the update and annual declarations process.
If any changes have been made to the trust (e.g., changes to trustees, settlor, beneficiaries, or anyone connected to the trust), these changes must be reported within 90 days of that change occurring. This must be completed in addition to the annual declarations process.
The annual declaration asks you to confirm whether any changes have been made to the trust in the previous tax year and, if so, these changes must be reported. It is crucial that, even if there have been no changes to the trust, the agent or trustees still need to "maintain" the trust and declare that there are no such changes.
Non-taxable trusts do not need to be updated on an annual basis (at present).
Changes made to any taxable trust must be reported to HMRC within 90 days of them occurring.
Trustees (or an agent acting on their behalf) must declare the trust is up to date on an annual basis by 31 January after the tax year in question. Not only will penalties apply for late updates, but tax returns should not be submitted unless the trust has been maintained and updated. All annual updates for the tax year 2021/22 should be completed by 31 January 2023.
Register of Controlling Interests in Land (RCI)
This new Register is intended to provide clarity on land ownership in Scotland and was launched on 1 April 2022. Owners (known as "the recorded person") must provide full information as to any person who exercises control over land (known as an "associate")
-Where a trust owns land, the trustees must keep the RCI up to date whenever trustees change via resignations, deaths or new appointments/assumptions.
income tax or capital gains tax returns
The need to make such returns this will depend on the type of trust and assets owned by the trustees.