Calling all Trustees
From 1st September 2022, most express trusts will need to be registered with HMRC, regardless of whether they are liable to pay tax. This extension to the Trust Registration Service, requiring non-taxable trusts to register, is a result of the UK’s implementation of the EU’s 5th Money Laundering Directive. It is the responsibility of the Trustees to make sure registration has taken place, so if you are a Trustee you should now consider whether your trust needs to be registered.
Which trusts need to register?
All express trusts in existence on or after 6th October 2020 need to register on the Trust Registration Service, unless they fall into one of the exempt categories. This also includes any trusts that were in existence at 6th October 2020 which have been wound up prior to 1st September 2022. In those circumstances, the trust should be registered on the Trust Registration Service and the account immediately closed.
The full list of exempt trusts that do not need to register can be found on the HMRC website, but some of the main exemptions are:
- Pension Scheme Trusts
- Some trusts for insurance policies
- Charitable trusts (if officially registered as a charity)
- Trusts set up for children under 25 years of age in the Will of a deceased parent/someone who had parental responsibilities for that child
- Trusts created when setting up a child’s bank or building society account.
If a trust is not on the exempt list, it will need to be registered with HMRC. Some common trusts that will need to register as a result are, for example, trusts set up by a homeowner who then transfers their property into the trust, and trusts set up in a Will (for example, giving a beneficiary the right to live in the property for as long as they need) that run for more than 2 years from date of death. Trusts established in a Will that run for less than two years from date of death do no need to register.
What information is required?
Basic details of all trustees, beneficiaries and the person/people who set up the trust will need to be included on the register. In addition, certain details about the trust (e.g. date of creation and details of the assets held in the trust) will also need to be included. One trustee will be nominated as a ‘lead trustee’ and some additional details will be included for that lead trustee.
All non-taxable express trusts that are not in an exempt category that were in existence at 6th October 2020 should have been registered by 1st September 2022, however HMRC has acknowledged that this is a large undertaking and it will be a very new procedure for most trustees. As a result, there will be no penalties for the failure to register or for late registration unless that failure is shown to be due to deliberate behaviour on the part of the trustees.
Any new non-taxable trusts that are created that are not exempt will need to register on the Trust Registration Service within 90 of creation and your solicitor should advise you of this as part of the process of creating the trust.
In addition to the initial registration, there are requirements to update the register when registerable details (such as trustees details) change, and even if no changes take place an annual declaration must be completed each year confirming the details are up to date.
For more information please visit https://www.gov.uk/guidance/register-a-trust-as-a-trustee.