The Trust Registration Service: Deadline to register non-taxable trusts approaching – September 2022

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The Trust Registration Service (TRS) was set up by HMRC in 2017 as part of an anti-money laundering directive. The purpose of the register is to record details such as who the settlor of the trust is, who the trustees are, and the assets contained within the trust.

At its creation, all UK express trusts liable to pay taxes such as Capital Gains Tax, Income Tax and Inheritance Tax, were required to register. However, new rules came in to force in October 2020 regarding non-taxable trusts, stating that they must also now be registered unless specifically excluded by HMRC.

Bethany Fielding, Trainee Solicitor in WSP Solicitors’ Private Client Department, highlights the steps you need to take to register non-taxable trusts before the September 2022 deadline.

What does the deadline mean?

The new rules state that non-taxable trusts that were created on or before the 6th of October 2020 must be registered on or before the 1st of September 2022.

For non-taxable trusts created after the 6th October 2020, it must be registered with HMRC within 90 days of it being created or becoming liable for tax, or on or before the 1st September 2022 (whichever is later).

Therefore, going forward after the September deadline has passed, all new trusts will need to be registered within 90 days of its creation. There is an obligation on trustees for the trust to be registered within the above timeframes, and HMRC will impose financial penalties for any trusts that are not registered within the deadline.

If there are any changes to the trust details or if the circumstances change after registration, these must be recorded with the trust register within 90 days of the change.

What type of trusts are affected?

HMRC have stated that all UK express trusts must be registered even if they have no tax liability. An express trust is one which is deliberately created by the settlor, and it is not implied or imposed by statute.

Non-UK express trusts, like trusts that acquire land or property in the UK or ones that have at least one trustee resident in the UK and enter into a ‘business relationship’ within the UK, will also have to be registered.

Personal representatives will also need to be aware, as complex estates will have to be registered. An estate defined as complex is one in which:

  • The total income tax and capital gains tax due is more than £10,000; or
  • The gross value of the estate exceeds £2.5 million; or
  • The value of assets sold by the personal representatives in any one tax year is more than £500,000.

Although the majority of non-taxable trusts will need to be registered, HMRC has confirmed that there are some exceptions to the rules. These include but are not limited to:

  • Will Trusts created on death providing they only hold the estate assets for up to 2 years after the person’s death;
  • Charitable trusts;
  • Trusts used to hold money in a UK registered pension scheme; and
  • Trusts that are life policies that pays out on death or critical illness.

How can a Solicitor help you?

A solicitor can help with firstly confirming the type of trust that you may have in place. This would include reviewing any trust documents you or our firm may hold. A solicitor can then confirm whether the type of trust that you have needs to be registered, and the next steps on how to complete the registration with the TRS.

 

You can contact us here or by using the contact form on this page and someone will get back to you. Alternatively, you can call us on 01453 847200 to speak with our team.

 


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