Trustees – don’t miss your trust registration deadline

In 2017, the Trust Registration Service (TRS) was established to register trusts for both tax and Anti-Money Laundering (AML) purposes. At first, trusts only needed to be registered if they were liable to pay tax – for example, Capital Gains Tax, Stamp Duty Land Tax, Income Tax or any other kind of tax. On 6 October 2020, however, new rules were introduced requiring non-taxable trusts to also be registered (unless they met one of HMRC’s exclusion criteria). The deadline for registering non-taxable trusts (1 September 2022) is now approaching.

In this article, we will explain the types of trusts that must be registered and the deadlines for doing so, as well as providing some information on trusts that are exempt from registration.

Which trusts should be registered?

Basically, a trust will need to be registered if it doesn’t fall into any of the exclusion categories listed by HMRC. Finding out whether a trust should be registered is usually fairly straightforward; you can simply check on GOV.UK. However, there are a few more complex instances you should be aware of, as we’ve highlighted below.

• Trusts that were in existence on or after 6 October 2020 must be registered even if they aren’t in existence now. The trustee must register the trust with the TRS and then close the record.

• Trusts created by a Will must be registered if they are still in existence or the estate has not been finalised within two years of the date of death.

• Trusts created through co-ownership of property (i.e., Declarations of Trust) must be registered if the structure of property ownership means that those named on the legal title differ from those named to have a beneficial interest under the terms of the Declaration.

Which trusts are excluded from registration?

Certain trusts are excluded from registration (unless they are, or become, liable to pay tax). These include but are not limited to:

• Trusts used to hold the assets of a UK pension scheme
• Trusts created to hold an insurance policy which pays out on death, terminal/critical illness or disability
• Charitable trusts
• Pilot trusts set up before 6 October 2020 and which hold no more than £100. Pilot trusts set up after 6 October 2020 require registration
• Trusts created by a Will, which are ended within two years of death
• Trusts for children under the age of 18 or trusts for adults aged between 18 and 25 that are created by the Will of a deceased parent.

You can find more information about trusts that are excluded from registration at the following links:

1. www.gov.uk/guidance/register-a-trust-as-a-trustee
2. www.gov.uk/hmrc-internal-manuals/trust-registration-service-manual/trsm23000.

If a trust does not fall into any of the exclusion categories, then it needs to be registered.

Registration Deadlines

The deadline to register a trust depends on when the trust was created and whether it pays tax.

Non-Taxable Trusts

• Trusts created on or before 6 October 2020 must be registered by September 2022
• Trusts created after 6 October 2020 must be registered:
  • within 90 days of being created or becoming liable to tax, or
  • on or before 1 September 2022 (whichever is later).

Taxable Trusts

• Trusts created on or after 6 April 2021 must be registered:
  • within 90 days of the trust becoming liable to tax
  • or on or before 1 September 2022 (whichever is later).
• Trusts set up before 6 April 2021 must be registered:
  • On or before 31 January of the tax year after the one in which the trust receives income or has capital gains (if it has been liable for tax before)
  • By 5 October of the tax year after the one in which the trust receives income or has capital gains (if it is the first time the trust has been liable to tax).

Updates

Any changes to the trust, including the trustees, beneficiaries or assets, should be updated on the register within 90 days of the trustees becoming aware of the change.

Trustees and registration

It is the trustees’ legal responsibility to ensure a trust is registered prior to the relevant deadline. We therefore recommend that trustees deal with this as soon possible to prevent any potential HMRC penalties for late registration.

The registration of the trust is carried out online. Trustees can register and find additional information relating to registration requirements using the following link: www.gov.uk/guidance/register-a-trust-as-a-trustee.

Alternatively, trustees can instruct a suitable professional to deal with the registration on their behalf.

When completing the registration, trustees must provide full details of the trust, including the details of all trustees, the settlor and the beneficiaries. If the trust is taxable, trustees will also need to provide information about the trust’s assets.

It is then the trustees’ responsibility to keep the register up to date and make any required changes within the 90-day period.

Instructing Attwaters Jameson Hill Solicitors

Our fees for dealing with trust registration on your behalf will largely be dependent on the type of trust in question, the number of trustees and beneficiaries, and whether the trust is taxable or non-taxable. All of these factors will determine how much information we’ll need to include in the register.

As a guideline cost, we estimate our fees to be in the region of £550 – £750 plus VAT.

If you are a trustee and require our assistance, then please contact us on 0203 871 0023 or via email at anna.lochhead@attwaters.co.uk .