From 1st September 2022, under the Fifth Money Laundering Directive most UK express trusts (ie all trusts that have been deliberately created by a settlor) and certain non UK trusts (whether taxable or not) must be registered with the Trusts Registration Service at HM Revenue & Customs.
There are certain exceptions to those rules:
● pension schemes
● charitable trusts
● will trusts that are wound up within two years of death
● Will trust is a trust for bereaved minors or an 18-25 trust (where a child under the age of either 18 or 25 respectively inherits from a parent)
● policy trusts paying out on death or critical illness
● Co-ownership trusts where the legal and beneficial owners are the same persons commonly found where a couple jointly own their home or have a joint bank account
● Existing trusts with a value of less than £100 created prior to 6 October 2020.
Originally introduced to be registered by 10th March 2022, HMRC delayed this until 1st September 2022, however, the deadlines are as follows:
● Non-taxable trusts in existence on or after 6 October 2020 must be registered by 1 September 2022 (even if they are now closed)
● Non-taxable trusts created after September 2022 must be registered within 90 days.
● Changes to the trust details or circumstances must be registered within 90 days of the change.
● Personal representatives (the person(s) responsible for managing the deceased’s estate) need to register with HMRC by 5 October after the tax year when the estate starts to receive income or has chargeable gains on which tax is payable if the estate is classed as complex and/or been administered for over two years.
● The registration deadline for taxable relevant trusts set up before 6 April 2021 is on or before 31 January after the tax year in which the tax liability occurred (or by 5 October after the end of the tax year for a first-time liability to Income Tax or Capital Gains Tax).
● For trusts set up after 5 April 2021 the deadline has been extended to 1 September 2022.
Taxable relevant trusts set up on or after 4 June 2022 must be registered within 90 days of the trustees becoming liable to pay UK taxes. This also applies to non-taxable trusts. Once a trust is registered on the TRS the trustees will have 90 days from becoming aware of any changes to update the register.
The Trusts are registered using the Trust Registration Service via the gov.uk website. Most accountants will be registering the trusts for Clients and some will do it for a fixed fee. There is a legal obligation for trustees to register the trust, but some trusts are exempted from doing so.
If you do not register your trust or keep the details on the register up to date, HMRC enforces penalties. It is proposed that these penalties are not as severe as the self-assessment penalty regime, and that ‘nudge letters’ will be sent for first offences with a proposed penalty of £100 for any subsequent offences.
There will be a similar appeals process to the self-assessment regime. HMRC will enforce more stringent penalties if trustees deliberately ignore the registration requirements.