20th December 2021Trust Registration Service – what you need to know ahead of September 2022 deadline

In September, the Trust Registration Service (TRS) finally opened for the registration of non-taxable trusts. As a quick recap, the regulations were brought into effect in order to comply with a change in the anti-money laundering regulations. In a nutshell, this means any UK express trust which pays income tax, capital gains tax, inheritance tax, or stamp duty reserve tax has been required to register the details of their beneficial owners (i.e their settlor(s), trustees and beneficiaries).

In this article Marc Brinklow, Trust Assistant Manager explains what you need to know when registering a trust on the TRS, including who needs to register, what you need to include, and key dates.

Who needs to register?

When the TRS was introduced, any express trust (UK or non-UK resident trusts) that incurred a UK tax liability during any given tax year were required to register with the TRS.

However, from 6 October 2020, all express trusts are required to register with the TRS (unless excluded), regardless of whether they have a UK tax liability.

Which trusts do not need to register (excluded trusts)

The following trusts are not required to register with the TRS, unless they have a UK tax liability;

  • UK registered pension trusts
  • The trust is 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
  • The trust 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
  • It is a charitable trust that is registered as a charity in the UK or which are not required to register as a charity
  • It is a ‘pilot’ trust set up before 6 October 2020 and holds no more than £100 — pilot trusts set up after 6 October 2020 will need to register
  • It is a co-ownership trust 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’
  • It is a will trust created by a person’s will and comes into effect on their death, providing they only hold the estate assets for up to 2 years after the person’s death
  • It is a trust 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
  • It is a ‘financial’ or ‘commercial’ trust created in the course of professional services or business transactions for holding client money or other assets

What if you are already registered with HMRC?

The deadline is dependent on when the trust was created, whether it is taxable or not and if the trust is already registered for Self –Assessment (SA) for Income Tax or Capital Gains Tax (CGT).

Non-taxable trusts
Date Created Before or on 6th October 2020 After 6th October 2020
Is the trust registered for SA for Income Tax or CGT

Must be registered by 1 September 2022.

 

Must be registered within 90 days of being created or by 1 September 2022 (whichever is later).

 

Taxable trusts
Date Created Before 6th April 2021 On or after 6th April 2021

Is the trust registered for SA for Income Tax or CGT

If the trust is already registered for SA and incur a UK tax liability in a given tax year, then it must be registered by 31 January after the end of that tax year. The trust must be registered within 90 days of the trust becoming liable for tax or 1 September 2022 (whichever is later).

If the trust is not registered for SA and incurs an Income Tax or CGT liability for the first time in a given tax year, then it must be registered by 5 October after the end of the tax year.

If the trust is not registered for SA and does incur other taxes in that tax year , then it must be registered by 31 January after the end of that tax year.

Maintaining and updating the trust records on the TRS

Even if the trust details remain the same, the trustees will still be required to submit an annual declaration to confirm the details held on HMRC’s record are accurate and up to date. From 2022 onwards, updates will be necessary each time there are changes to the beneficial ownership information, such as trustees or beneficiaries.

The penalties on late registration/annual declaration

HMRC may issue a payment penalty if the trust has failed to register or submit an annual declaration by the deadline.

Please get in touch to see how we can assist or to discuss specific circumstances.

Key contacts

Stevie Heafford
Partner

07748 537469
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